Working Closely With Your Bank and Your Farm

Douglas Green & Tom Bell

Bankers are an important part of the team in most businesses. They provide the necessary working capital to fund business growth and development.

Below are some key lessons we have learned over recent months to help manage this relationship.

Reduce Exposure?

Be aware that banks granted additional overdraft facilities to many during the price crash, and are looking to see that additional funding paid back whilst times are better.

Dialogue between farmer and bank is key. A close relationship with your lender is vital; it takes time for a business to recover after a period of down turn, and debt reduction will not start until the business can move back into a position of a positive cashflow.

Anticipate demands for additional funding. In a recent survey it was revealed that most businesses requesting extra funding ask their bank in the week they need it. This does not put one in the best bargaining position!

Banks have an appetite to lend to fund projects for growth and efficiency, and interest rates are very attractive.

Quality Business Plans:

Gone are the days when all that was required was a quick cashflow and no supporting evidence. Banks are looking for quality budgets to support their lending decisions. It goes without saying that our budgets meet these requirements, and are well respected by agricultural managers and clients alike. We make sure our plans are achievable, realistic and credible, and help turn your vision into reality.


It is important to actively manage the relationship with the bank. View your account manager as a key part of your team, there to contribute to your business success.


It takes time to do a business plan. This fact needs factoring into your funding request time scale!

Quality Bookkeeping:

Most, but not all are using computer or web based software rather than a paper ledger or DIY excel spreadsheet. If you aren’t, its time to change! Here are some tips to get the best out of your software from Sarah …..

  • Use a package that deals with cash as well as invoices
  • Agricultural packages are best
  • Avoid the use of sundries or unallocated when assigning invoices to nominals
  • Make sure the figures are reconciled to the bank balance each month
  • Include capital and loan items rather than just the monthly amounts 

Quality book keeping provides you with an insight into your costs and returns, allows fast and accurate budgeting and analysis, and should result in lower professional fees.

Be Realistic on Prices:

Prices are volatile and downturns can be sudden and unexpected.  Indeed, there are signs prices will fall significantly next year.

The prices used in a budget needs to take account of time scale: If looking at investment opportunities or restructuring, the use of a 10 year average price is a  prudent starting point, then stress testing by looking at sensitivities to price changes. In the case of milk this equates to 25ppl for non-aligned suppliers.

Focus on Costs!

Whist you have little control over price, you do have control over costs. Experience over the last couple of years shows the tremendous progress that some have made on costs, and of course this leads to a more robust farming business.

This is not lost on the banks, who increasingly take unit cost of production into account when making lending decisions.