Time to update financial statements

from OFN February 10, 2020

What your credit report shows

It’s ‘That’ Time of Year A new year means it’s time to update your financial statements By Erin Harvey

Happy New Year! 2019 is a year most farmers and ranchers won’t forget.

We experienced an interesting planting season – inclement weather, market challenges, and a near record-slow harvest which left many looking forward to putting 2019 behind them and getting focused on 2020.

As everybody knows, a new year brings new goals, new outlooks, and in the banking world it also means updating financial statements (que the sighs and eye rolls). Since most farmers utilize cash-based calendar-year accounting, the end of the year is prime time for bringing it all up to date.

Your lender will more than likely want to sit down with you in January or February and will want updated financials, so getting a jump start on it now will ensure more accurate information is provided.

Use your information to create a budget and set financial goals for the new year. This can make a big difference in your financial outlook for the new year. With your goals in mind, determine where you stand today given crop and cattle budgets and current commodity prices. Update your projections, as well as your expectations, regularly.

Ag lenders want to know that you have a certain level of financial understanding to operate and run your farm. Being able to have the conversations about your farm’s financials gives lenders the confidence in your ability to run a successful farm business. Let your banker know what your financial goals are for the year. Are you looking to buy more cattle or is your neighbor up the road looking to retire and you have always had your heart set on buying their farm?

Another area I urge customers to dive in to as the new year takes off is their insurance policies and coverage.

Sit down with your insurance agent and make sure all the changes in your balance sheet are reflected. Did you trade tractors, did you build a new barn? Are they covered? Are your life insurance policies enough to cover all of your debt and provide for your dependents future?

Also, verify your beneficiaries to ensure correctness. Taking the time to review these small things can help alleviate risk in the future.

On a final note, as we dive into 2020, I urge each of you to share the positivity in our industry. There is so much to be excited about when it comes to the future of agriculture. The more we focus on the positive bright future of the industry, the more we progress.

I urge each of you to speak up and tell your story of how great farming is for raising a family, sustaining your community, and feeding the world. Every farmer needs to be an advocate for agriculture. Erin Harvey, is the CRCM, vice president at Community National Bank & Trust in Lamar, Mo. She may be reached at erin.harvey@communitynational.net