Notes from the President

Ken Hilton - President Red Wing Software

I recently attended the Farm Financial Standards Council annual meeting in Illinois. This organization’s mission is: Promoting Uniformity and Integrity in Financial Reporting and Analysis. One of the sessions was a panel of three bankers discussing what information bankers typically use to evaluate loan risk and what they would prefer. The panel was very diverse, with one panelist from a nationwide lending organization, one from a local bank, and one mortgage lender.
They all discussed the need for recent tax returns and a balance sheet. They mentioned they typically get balance sheet information for varying times of the year, and sometimes handwritten. While, in some cases, competition for the loan dictates they don’t push for more information, what they really would like to see are much better and consistent records.
In every case, they mentioned wanting professional-looking balance sheets prepared in the same period each year, accrual profit and loss statements so they can evaluate trends in the business over time, and projections for the business. It was interesting that another conference session talked about succession planning and the importance of good records when it’s time to transfer the business to someone else.
I understand I’m preaching to the choir since most people reading this already can produce these important documents with their software. But, at the risk of repeating myself from previous articles, “If you keep good records for yourself, you’ll have good records for anyone else that may need them.”
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