With planting season in full swing, it’s a good idea to take a step back and evaluate a few financial checkpoints to ensure you are on the right track for hitting your goals for the season. Planting season is one of the busiest and most cash-intensive times of the year, so taking a proactive approach to reviewing your financial position can help support informed decision-making and position your operation for success throughout the entire year.

Know Your Numbers

Input Costs

Cost awareness will improve everything from your marketing decisions to your pricing strategy, to your peace of mind and confidence. Start by identifying your break-even cost and cost per acre. Having a clear understanding of the cost to produce your crop allows you to better manage input expenses like seed, fertilizer, and fuel while keeping track of what you’ve already spent this season. Review which costs have increased since your original projections and evaluate where adjustments can be made. If needed, look for opportunities to reduce expenses now so you can stay on track with your goals.

Working Capital

During this time of year, when cash flow is typically lower, it is also important to evaluate your working capital. Do you have enough cash flow to cover your input costs and operating expenses? An operating loan can help give you the working capital you need to keep operations running smoothly.

Be sure to monitor your operating line usage closely—if expenses are higher than expected and you need to increase your line of credit, reach out to your lender as soon as possible to discuss the right solution to support your operation.

Revenue Projections

As you wrap up planting, evaluate whether your planted acres matched your plan going into the season. Are there any early indicators such as weather, soil conditions, or prevented planting that could impact your yield for harvest season? If so, communicate these challenges as far ahead as possible with your lender, especially if they are impacting your revenue projections.

It’s never a bad idea to communicate potential challenges to your tax specialist ahead of time too. This can help them estimate your tax liability and recommend strategies to manage it as well. At GreenStone, our lending and financial services work together, minimizing the need to work with a separate lender and tax and accounting specialist. Our team is here to find the best possible solutions for you!

Plan Beyond the Current Season

Service Your Equipment

Are there any repairs or routine maintenance that should be performed on your equipment? Don’t wait until something breaks to service your machines; preventative maintenance goes a long way in extending the life – and value – of your costly investment. Now is the time to get your fleet ready for harvest season. It’s also important to consider any equipment upgrades or replacements that should be made at this time. Just be sure you are avoiding unnecessary capital purchases, and the return on investment is beneficial to your operation and your bottom line!

Evaluate Coverage Levels

It’s also a good idea to consider additional coverage options for your crops, such as adding crop hail insurance to your policy which can protect you against yield losses caused by fire, lightning, or vandalism. Talk to your crop insurance specialist about additional coverage options that are available to you.

Invest Now in Input Costs

If possible, purchasing inputs such as seed and fertilizer in the off-season can save you time and money in the long run.

Plan for your other upcoming seasonal cash flow needs as well. Ask yourself what your cash flow needs will be as you begin to plan for harvest season that you can account for now, such as grain storage or land rent payments.

The Power of Being Proactive

More than anything, being proactive when communicating with your lender is key. Knowing your numbers provides the foundation for every decision you make, helping both you and your lender make informed decisions that will help you reach your goals each season.

Contact your local team of lending experts at your nearest GreenStone branch to learn more.

 

This article was originally published in Michigan Farm News.