Q3 Farm Cash Flow Planning Before Harvest

1. Compare Your Projection with Year-to-Date Results

Start by comparing the income and expenses you expected at the beginning of the year with what has actually happened.

Check for changes in the areas that matter to your operation, which may include:

Feed, seed, or other inputs
Fuel and utilities
Repairs and maintenance
Hired labor
Storage and transportation
Insurance
Existing debt payments
Family living expenses paid by the operation
Expected crop, milk, livestock, or other farm income

It’s not enough to know whether total annual income is expected to exceed total expenses. You also need to know when cash will be available and when bills must be paid.

A farm may expect to be profitable for the year but still have a period when available cash isn’t enough to cover upcoming expenses. At the same time, positive cash flow by itself doesn’t necessarily mean the operation is profitable. A cash flow budget tracks when money comes into and leaves the operation, helping you prepare for times when expenses may arrive before income.

If your records have fallen behind during the summer, bring them up to date before relying on your Q3 projection. AbbyBank’s Business eBanking provides access to balances, transaction history, statements, and other account information that can help when reviewing recent cash activity.

2. Estimate the Cash Needed Before and During Harvest

Next, list the expenses you expect to pay through harvest and when each payment will be due. Work from your own production records, current contracts, equipment condition, and recent cost information.

Depending on the farm, Q3 expenses may include:

Fuel and transportation
Seasonal or additional labor
Equipment repairs and parts
Custom harvesting
Grain drying and storage
Feed or livestock costs
Rent, insurance, or scheduled loan payments
Other costs specific to the operation

Avoid building your plan around a single best-case harvest estimate. Consider how changes in production, timing, costs, or sales could affect available cash.

Focus on identifying which changes could create a cash gap and estimate how large that gap might be.

Set aside time now to update your expected income and expenses by month. A monthly view may uncover timing issues that an annual total doesn’t show.

3. Review the Farm’s Available Cash

Once you’ve estimated the next several months of expenses, compare them with the funds your operation expects to have available.

Review:

Current cash balances
Expected receivables and sales income
Available reserves
Existing debt payments
Planned equipment or other major purchases
Current lines of credit
Other known sources and uses of cash

This step helps separate an expected profit from the cash available to pay bills. A sale expected later in the year doesn’t cover an expense due next week unless other funds are available in the meantime.

Your Business/Ag Checking activity can help document day-to-day income and expenses. A Business/Ag Savings account can also help keep reserve funds separate from the money used for everyday expenses.

Before using available cash for a large repair or purchase, determine how much is already committed to upcoming bills, debt payments, and other needs.

4. Compare Repairing, Replacing, and Waiting

An equipment problem before harvest rarely comes down to the repair estimate alone. Consider what each option could mean for this season and the next several years.

If You Repair the Equipment

Ask:

How long is the repair expected to extend the equipment’s useful life?
Have repairs become more frequent?
Could another breakdown cause costly downtime during harvest?
How quickly can you get the necessary parts and service?
How will paying for the repair affect cash available for other expenses?

If You Replace or Purchase Equipment

Consider:

The purchase price and ongoing ownership costs
The equipment’s expected workload and useful life
Available trade-in value
Down payment and financing needs
The effect of repayment on future cash flow
Whether the equipment adds needed capacity or primarily replaces an existing asset

If You Lease or Postpone

Consider how often you’ll use the equipment, how long you’ll need it, and whether the lease payments fit your cash flow.

If you delay the decision, think about how another season of repairs, downtime, or reduced capacity could affect the operation. Waiting may preserve cash now, but it could also lead to additional costs later.

Avoid making the decision based only on a possible tax benefit. Tax treatment depends on the purchase, business structure, and current tax rules. Review the potential tax effects with a qualified tax professional before moving ahead.

You can use AbbyBank’s loan and credit line payment calculator to explore estimated payments using different amounts, rates, and terms. The calculator provides estimates for planning purposes and isn’t a quote, approval decision, or substitute for personalized financial or tax advice.

5. Discuss Financing Early

Talking with an agricultural lender before harvest or before a machine becomes unusable gives you more time to review your records, discuss financing options, and explain how the loan would be repaid.

Possible financing options may include:

An agricultural line of credit for eligible seasonal expenses, working capital, repairs, feed, seed, or other operating needs
A term or personal property loan for eligible machinery, equipment, or livestock purchases
Agricultural real estate financing for eligible land, buildings, or improvements
An FSA-guaranteed loan when the farm and financing request meet applicable program and lender requirements

AbbyBank offers agricultural loans, lines of credit, and personal property financing for eligible equipment and other farm needs. Loan packages may be structured around an operation’s seasonal cash flow, subject to credit approval and other applicable requirements.

No single financing option is right for every farm. The right choice depends on what you’re financing, when the money is needed, how it will be repaid, your available collateral, and the farm’s overall financial position.

Related: Farm Loan FAQs

What to Bring to a Lender Conversation

The exact information needed will depend on the farm and the financing request. As a starting point, consider gathering:

An updated balance sheet
Year-to-date income and expense information
A current cash flow projection
A schedule of existing debt
Recent production or sales information
An equipment quote or repair estimate
Information about a potential trade-in
A description of the financing need
The expected source and timing of repayment

Organized records can help explain what has changed since your original annual plan and how the request fits into the farm’s broader financial picture. They may also make it easier to compare the effects of repairing, replacing, leasing, or postponing a purchase.

AbbyBank’s local business and agricultural banking team can help you determine which information may be useful for your specific financing conversation.

Q3 Farm Finance Checklist

Before harvest activity picks up:

Update actual year-to-date income and expenses.
Revise expected income and expenses for the rest of the year.
Identify when cash is expected to arrive.
List upcoming bills and their payment dates.
Review cash balances, reserves, and available credit.
Account for existing loan payments.
Estimate harvest-related expenses.
Review equipment condition and repair history.
Compare the cost and timing of repairing, replacing, leasing, or waiting.
Gather current financial records and equipment estimates.
Discuss possible cash gaps or equipment needs with an agricultural lender.
Review tax implications with a qualified tax professional.

Put Your Q3 Farm Cash Flow Planning to Work

A Q3 financial review doesn’t need to answer every question about harvest. It should help you see when cash may become tight, which expenses need attention first, and how a repair or equipment purchase could affect the operation beyond this season.

Start with current records and realistic timing. Update your cash flow projection, consider more than one possible outcome, and gather the information needed to discuss a potential financing gap.

If you’re preparing for harvest expenses or considering an equipment purchase, contact AbbyBank to speak with an agricultural lender or visit one of our Wisconsin branches.

Financing decisions depend on your operation, credit qualifications, and other factors. Talk with an agricultural lender, accountant, or tax professional about your specific situation.

Farm Cash Flow Planning FAQs

What should be included in farm cash flow planning before harvest?

Include the timing and amount of expected cash income, operating expenses, equipment or other major purchases, debt payments, and available financing. Use the farm’s current records and revise earlier estimates to reflect year-to-date results and known changes.

When should a farmer talk to a lender about equipment financing?

Start the conversation when you recognize a potential need rather than waiting until the equipment is unusable or a purchase must be completed immediately. An earlier discussion provides time to review costs, financial records, repayment plans, and possible financing options. It doesn’t guarantee approval or a particular loan timeline.

Can an agricultural line of credit be used for harvest expenses?

An agricultural line of credit may help cover eligible working-capital and seasonal operating expenses. Our agricultural lines of credit may be used for needs such as repairs, crop seed, livestock feed, and other working-capital expenses. Actual use, availability, and terms depend on the financing agreement, credit approval, and the farm’s circumstances.

What financial records should farmers review in Q3?

Review the farm’s balance sheet, year-to-date income and expenses, cash flow projection, debt schedule, and current account activity. Equipment quotes, repair estimates, production information, and anticipated sales may also help when evaluating a specific purchase or financing need.