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Get a head start on the farm’s financial matters for 2021.

Ashley Arrington, Director of real estate lending

September 11, 2020

3 Min Read
c George/Thinkstock

Well y’all, here we are again!

When I start buying large amounts of Reese’s pumpkin-shaped peanut butter cups, that is my cue to remind everyone to start thinking about getting their lines of credit renewed for next year.

YES -- start already. Because – why not? Get ahead of that 8-ball folks.

Update your balance sheet

Start updating your balance sheet with things you know have changed from last year, but won’t change much by year end. For Example:

  • Land values – Have you sold or purchased? Installed irrigation? Think about anything that would have increased or decreased land values from last year.

  • Equipment values – Have you sold or purchased? Need to re-evaluate values from last year?

  • Land & Equipment debts – Go ahead and update the balances of all previous debts, delete paid off or sold items, and add any new debts.

  • Prepaid items – Go ahead and put those figures in there so you won’t forget to add them later!

  • Go ahead and update your intermediate and long term assets and liabilities. Those probably won’t change much from now until renewal time unless you have a couple more payments due. Just put a note on loans left to pay so you will remember to update the balances later.

If you go ahead and do this part of the balance sheet, all you will have left to do (when harvest is complete and 2020 finally goes away) is to update your current assets, current liabilities, and any balances that were changed by payments you have made. Because, really -- isn’t the most aggravating part updating all those balances? 

Related:Why you should set small goals for farm cost cutting

Year-end figures

Next, take a peek to see how 2020 is going to end. Lay out everything you have left to pay (open accounts, annual payments, rent, insurance, etc.), what you expect to pay until Year End (fuel, labor, living expenses, etc.), and all the income you expect to receive (crop – using what yield you think is best & price, custom work, etc.).

Once you gathered all that information run a quick analysis to see if ends meet and how much wiggle room you have.

You don’t have to do this, but for those who are anxious it helps bring some peace of mind. Also, if you see a problem you can go ahead and begin taking steps to correct.

I know it seems early, but when harvest starts you will have no time to do these things. Then you will want a break and the holidays will be upon us. So what ends up happening? You don’t get all your stuff in order until right before renewal time and you are rushing in the lender’s door with everyone else. 

If you beat the crowd the process would be much faster and you will be able to enjoy the time after harvest more, because those not so fun things will be mostly done.

Related:When and why to update your business plan

If you want a guide to get this process going you can find an end-of-harvest checklist and blank balance sheet on my website.

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

About the Author(s)

Ashley Arrington

Director of real estate lending, Ag Resource Management

Ashley Arrington grew up in Georgia surrounded by everything agriculture. She graduated with a Bachelor’s degree in Finance, then obtained her Masters of Business Administration degree. She worked in the banking industry for 14-plus years where she concentrated exclusively on agricultural banking, financial analysis and debt analysis/placement. She was the founder of AgriAuthority, a consulting company focused on the financial side of agriculture. Now, Ashley is the Director of Real Estate Lending for Ag Resource Management. She also teaches banking and financial concepts and works as a public speaker with appearances at various seminars and conferences. NextGen Business Insight aims to offer valuable business insights for young farmers.

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