By Blake Jackson
Harvest season brings a demanding schedule for farmers, with long hours spent operating combines, transporting crops, and managing field activities. Amid these responsibilities, reviewing business finances may seem like a task best saved for winter.
However, harvesting is an important opportunity for producers to assess their financial position and make timely adjustments before the end of the year.
Matt Huster, Executive Vice President and Chief Credit Officer at FCS Financial, emphasizes the importance of financial planning throughout the agricultural year. He recalls an economist explaining that having a business plan can double a farmer's opportunities for profit.
Regular financial reviews help producers understand their operation's performance and identify areas that require attention.
One of the first steps is comparing the original operating plan with current conditions. Farmers should examine projected yields, commodity prices, production expenses, cash flow, and working capital.
Weather patterns, changing markets, and rising input costs can significantly affect initial projections. Updating these estimates during harvest allows producers to recognize potential financial challenges before they become more difficult to manage.
Cash flow is another critical area to monitor. Harvest often involves several major financial decisions, including grain sales, storage arrangements, and purchasing inputs for the following growing season.
Reviewing available cash and expected expenses helps farmers maintain liquidity and make informed decisions about spending and investments.
Working capital also deserves close attention. Although strong yields can improve farm income, increasing operating expenses may reduce the funds available to manage unexpected costs.
Evaluating working capital during harvest provides a clearer picture of an operation's financial flexibility and its ability to withstand market uncertainty.
Communication with agricultural lenders is equally important. When actual yields, prices, or expenses differ significantly from expectations, producers should discuss the situation with their lenders early.
Transparent communication can help identify available options and develop practical solutions before financial pressures increase. Sharing both positive and negative developments supports better planning and decision-making.
Once harvesting is complete, farmers should update their balance sheets, evaluate profitability, and compare actual results with their original budgets. Identifying the factors behind financial gains or losses can provide valuable guidance for the next production cycle.
Financial management should not be limited to an annual review. Just as farmers regularly monitor crop conditions, they should consistently evaluate their financial performance.
Although harvest leaves little time for additional responsibilities, reviewing financial records before, during, and after the season can help producers improve financial stability, prepare for upcoming expenses, and build stronger agricultural businesses.
Photo Credit: getty-images-pixelift
Categories: Missouri, Business, Harvesting