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Ask the expert series from AgDirect

Published on 11/19/2021 on

Should you trade equipment now or is it more cost effective to hold onto it? What’s your repayment capacity if you do decide to upgrade? Have you evaluated all of your loan, lease or refinancing options?

Asking yourself questions like these is an important part of managing the financial health of your farm equipment fleet. Mark Smith, an AgDirect territory manager in Colorado and Kansas, shares his insights on other considerations to include in your year-end farm equipment financial check-up.

The post-harvest season is a great time to inspect the physical condition and performance of farm equipment. Why is it important for a farm business to also review the financial health and management of machinery this time of year?

Year-end is a great time to review machinery purchases made throughout the year. You’ll want to take a look at tax-saving strategies and make sure you are achieving your goals for the current tax year. It is also a good time to review older equipment purchases to make sure they are still relevant and fit your cash flow plan for the upcoming growing season. 

What are some steps farm business managers can take at year-end to calculate their equipment costs and ensure their machinery isn’t negatively impacting their operation’s financial footing?

Review the total cost of owning and operating key equipment on your books. Costs could include fuel, repairs, maintenance, insurance, taxes, interest and depreciation. Adding up these costs that occur throughout the year will give you an idea of how your costs are trending with a certain asset or across all equipment. Reviewing this trend year-over-year can help you make better decisions on when to replace a piece of equipment or maybe even refinance it if you see a better-than-expected trendline.

How can equipment financing serve as a useful tool for improving a farm’s financial position? What are some tools or resources AgDirect has available to help farm managers make the right decision for their operation when it comes to financing?

Equipment financing is a very useful tool that can allow you to add, replace or refinance key pieces of equipment in your operation and manage cash flow. AgDirect offers a variety of tools and resources to help you make informed decisions.

Our online payment calculator and AgDirect Mobile app are available to help you crunch the numbers day and night and we recently added an online equipment financing application. We know you are not sitting at a desk from 9 to 5, so the online application is another convenient option that’s available when you are.   

There are also a number of resources on and articles posted in the Learning Center with tips and topics ranging from planning your next equipment purchase, the latest updates on Section 179preparing for an auctionfinancing a private party purchase and many more.

How can the year-end review of machinery financial health and management be beneficial before meeting with a lender, tax advisor or accountant? What are some of the considerations for keeping those lines of communication open?

Understanding your operation’s needs and costs is important. Your trusted advisors only know what you tell them, or what they can see on paper. Having a solid equipment plan and being able to articulate and share it going into these meetings is key. Sharing the plan and updating it ahead of time will keep everyone on the same page and communication open.

What advice do you have for farm managers when it comes to keeping up to date on their machinery’s financial health and management? Are there any challenges or opportunities you are seeing in the equipment market impacting machinery management decisions?

Don’t procrastinate…updating your records with your machinery costs monthly or even weekly will make the process smoother. Combing through all those receipts at the end of the year isn’t fun for anyone.

Looking ahead with the current equipment market, the right machine for your operation is going to be hard to find. Low used inventory levels and manufacturing delays could continue to plague dealers through 2022 or longer. Planning ahead and having a solid equipment plan will allow you to maximize your time when searching for those key purchases.

Learn more about AgDirect equipment financing or get started with an application today by contacting your local FCS Financial office.

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