Last year my banker told me to be more proactive in giving him updates, so I brought my numbers in early. But then it seemed like I was scrutinized more than others who were disorganized and slow to meet with the banker. I was basically punished for being prepared. Any thoughts on what to do this year? — J.H., Indiana
It’s disappointing that you feel you’ve been punished for doing the right things. I believe that, ultimately, the farmers who are proactive and driving conversations forward with lenders will be better off in the long run.
In the short term, this can be frustrating. It’s true that bankers have more time to dig into numbers that come in sooner. As an unintended consequence, they can end up making it worse for their best customers — punishing the very behavior they said they wanted.
If all farmers were providing numbers and projections in the same time frame, this wouldn’t happen. But because bankers aren’t getting everybody’s numbers at once, they’re left to evaluate what’s in front of them: the proactive farmers.
By the end of the year, they may be running out of time and have a different perspective, having seen a wide range of financials by then.
In the spirit of maintaining open, proactive communication, have a candid conversation with your banker to share your concerns. Explain what you observed last year — maybe you know of other farmers who bank there and weren’t prepared or proactive, and went in late for their approvals.
Explain that you feel those farmers didn’t deal with nearly the level of scrutiny you faced. You wanted to share your concerns as 2018 approaches — wondering if you’ll be punished again for being proactive, or if you’d be better off waiting until late in the year to share your numbers.
I believe the answer here isn’t withholding information, but having an open conversation with the lender about last year’s frustrations. The discussion should include what you’ve observed and experienced, followed by talk of what can change for this year.
Frye is president and CEO of Water Street Solutions. Read his blog, Finance First, at FarmFutures.com.