Well Prepared Financials Reflect Good Management Skills

Every opportunity you get to show your landlord, banker, integrator, employees, and others that you are a good manager will pay off down the road.

Management skills can be shown in many ways, but I will focus on just one today. The quality of an operation’s financial statement is a big indicator of the management ability of the producer. The financial statement is usually pushed to the side and not even thought about until the banker asks for it, and then it’s often put together at the last minute. We see all types of financial statements. We have received numbers written on a piece of paper that we could barely make out detailed financial statements.

Good quality financial statements include the supporting of almost every number you have on the statements.

Examples:

1. Crops on hand should list commodity, bushels, and price per bushel.
2. Investment in growing crops should include commodity, acres, and price per acre invested.
3. Loans should include lender, collateral, payment, rate and principal balance.
4. List equipment lease payments on a separate page and don’t include the value of the leased equipment on your equipment list.

Some producers can prepare their own financial statements and provide good quality detailed financial statements, but others don’t have the time or ability to prepare them. Being a good manager doesn’t mean that you have to do it yourself; being a good manager means recognizing that you can’t do it and hiring someone to do it for you.