In times of heightened uncertainty, farm owners and managers must take proactive steps to strengthen their financial foundation. A well-organized financial picture not only provides clarity but also equips you with agility to make smart, informed decisions when unexpected challenges arise.
“Getting financials cleaned up can help you make more informed and strategic operational decisions at various levels of uncertainty,” says Thomas Eatherly, Pinion farm financial business advisor.
“Knowing your position allows you to see options that let you change course quickly if needed.”
10 tips to tackle your farm or ranch’s financial cleanup
- Know your numbers – Ensure your accounting records, loan balances, and expenses are accurate. Understanding what changed and why helps you make informed decisions for the season ahead.
- Gather fixed-asset purchase documents – Send these to your accountant to update your depreciation schedule, which can help maximize deductions and improve tax efficiency.
- Reconcile bank accounts – Confirm your cash flow position and loan balances so you know if you have enough liquidity to cover upcoming expenses like seed, fertilizer, and labor.
- Review grain-sales contracts – Consider deferring or accelerating payments based on cash flow needs and tax strategy to maximize financial flexibility.
- Assess inventory and feed costs – Know your feed supply and factor in tax-deductible expenses to ensure you’re budgeting appropriately for livestock care.
- Plan machinery and equipment repairs – Address repairs before peak season to avoid breakdowns and unexpected costs during critical planting or calving periods.
- Review rental or lease agreements – Ensure all terms are up to date and clarify cost-sharing agreements with landlords or crop-share partners before planting begins.
- Develop a full farm budget – Outline expected input costs, operational expenses, and revenue projections to keep cash flow on track through the season.
- Reevaluate your risk management plan – Adjust your insurance coverage and risk strategy to align with potential weather, market, or operational changes.
- Communicate with your tax advisor – Share your budgets and financial plans early so your advisor can help optimize tax strategies before it’s too late to make adjustments.
“A solid financial plan isn’t just about stability — it’s about having the flexibility to adapt when volatility strikes,” Eatherly advises. “When you have a clear, holistic view of your finances, you can make proactive decisions to navigate change and keep your operation moving forward, no matter what challenges arise.”
Connect with Pinion’s ag-focused advisors to assess your financial agribusiness strategy or to request help with accounting and back-office services.
