Farm Progress

Keep banker informed with the right stuff.

Darren Frye, CEO

July 2, 2018

3 Min Read

Throughout the summer season, there’s a lot to stay on top of – in terms of growing your crop and your farm business. There’s so much to do to keep everyone on task and keep the crop and business on track.

Business relationships need to be maintained as well. Often, many farmers think of communicating more frequently with their lender during the winter season. That can help strengthen the relationship. But it’s even more effective to keep a strong line of communication open with your lender all year, including the growing season.

Up to date

Your lender wants to be hearing from you year-round, not just at loan renewal time or at a single off-season meeting. It’s true that most lenders tend to lean more toward the risk-averse side of things. They certainly don’t enjoy ‘surprises’ when it comes to their clients’ finances.

They want to know about any potential bumps in the road ahead of time – farahead of time. Then they need to hear your plan to address those issues and get the business back on track. Frequent communication is crucial in such a situation.

It all starts before the growing season ever gets underway, when you present your lender with several different financial scenarios of how your year might go. Having the data prepared and being able to present your numbers to your banker and have a conversation about possibilities can demonstrate your competence as an effective farm leader.

Keep it rolling

Even when that winter lender meeting goes great, communication needs to continue. Create a plan for the rest of the year for how you’re going to keep your banker in the loop. Use calendar reminders to help you call or meet with your banker for crop and business updates. Maybe it’s a phone call once a month. Plan for them to come ride the combine with you during harvest, too.

Any major changes from your original scenarios should be communicated as well – even if they’re not in a positive direction. Your banker would much rather hear about it now and how you plan to turn things around or adjust other aspects of your plan. They don’t want to find out late in the game that there’s been a major change in the financial state of your operation. They may be able to help you with ideas or suggestions if they know about any potential ‘bumps in the road’ early on.

Do you have regularly updated financial information to provide your banker with what they want to know? Do you know the metrics and ratios your lender is interested in and uses to evaluate the financial fitness of your operation?

Does your operation need a ‘check-up’ around that information, to help prepare for conversations with your banker? You can talk with our ag finance advisors this summer to get that data about your operation, and to get a better understanding of what it all means when it comes to your standing with the bank and relationship with your lender.

The opinions of the author are not necessarily those of Farm Futures orFarm Progress.

About the Author(s)

Darren Frye

CEO, Water Street Solutions

Darren Frye grew up on an innovative, integrated Illinois farm. He began trading commodities in 1982 and started his first business in 1987, specializing in fertilizer distribution and crop consulting. In 1994 he started a consulting business, Water Street Solutions to help Midwest farmers become more successful through financial analysis, crop insurance, marketing consulting and legacy planning. The mission of Finance First is to get you to look at spreadsheets and see opportunity, to see your business for what it can be, and to help you build your agricultural legacy.

Visit Water Street Solutions

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