DOLLARS & CENTS Only Wish Dr. David Kohl energizes agricultural lenders, producers and business professionals with his keen insight into the agricultural industry through extensive travel, research, and networking around the globe. He is a Professor Emeritus of Agricultural Finance and Small Business Management and Entrepreneurship at Virginia Tech, Blacksburg, VA. Dr. Kohl has traveled over 8 million miles in his career and conducted over 6,000 workshops and seminars for a variety of agricultural audiences. Additionally, Dr. Kohl’s personal involvement with agriculture provides a unique perspective into the future trends of the agricultural industry and economy. 10 HEARTBEAT | FALL 2017 Recently, I served as one of the instructors at a school for agricultural lenders. To spur discussion, I presented an exercise where lenders fill in the blank at the end of the sentence, “I wish my producer customers would ____.” Wow, did this energize the room! Actually, it provided an interesting perspective especially given the current economic climate in the agriculture industry. Let’s drill down and examine some of the class responses. One of the most common responses from the teams of five was a wish that their producer customers, as well as others that are applying for loans, would provide accurate financial statements. This includes balance sheets with reasonable asset values, a list of inventory, equipment, and livestock. On the liability side, lender groups responded that they wanted transparency concerning all debt obligations. Lenders noted that overdue, open accounts for repair and maintenance, feed, or fertilizer, along with the commingling of family living and private loans were some of the sizeable missing numbers. Another recurrent wish from lender groups was credit scores of their customer’s business partners, spouse, and others involved financially in the business. This invited further discussion of credit card debt and other consumer debt obligations. While these numbers are usually not business-related, they certainly can impact the overall financial picture. Another related response from many of the groups was family living costs. And the issue of commingling surfaced once again in the context of farm expenses. Lenders wish their producer customers would more clearly delineate business expenses from family living costs. According to surveys from my online webinars and from recent lending schools, family living expense is the second highest enumerated cause of financial stress behind challenged profit margins. Next on the list of group responses was communications with the lender. The general feeling among each of the lender groups was they do not like surprises. One lender shared the example of his client who purchased machinery and land out of his operating loan because of cash flow issues. Delaying communications with your lender when financial problems arise only intensifies the situation. Further, trying to evade responsibility erodes your business relationship with the lender as well as your reputation and credibility. Also regarding communications, lender groups wished their producer clients would include spouses and partners on financial discussions including transition, growth, or expansion.