The Fiscal Management 5 Step Plan for Grain Elevator Financing

The grain company CFO may have been viewed as a rare species prior to 2008, but the last 7 years have quickly brought the need for a CFO’s skill set to grain companies all across North America. Money has become the other commodity we manage, with our success directly impacting the merchandiser’s bottom line. With volatility always a concern in the grain markets, take a couple minutes to run through “The Fiscal Management 5 Step Plan” to head off any potential challenges in grain elevator financing.

1. Grain and cash flow planning.  Do you have the operating credit line to handle your potential ownership position including market rallies, and do you have the working capital to support your borrowing base?
2. Trend and peer financial ratio analysis. How do your financial statements look over the past 5 years, and how do they compare against others in the industry?
3. Capital improvements and future growth plans. How will a record crop alter your plans?
4. Mark to Market of your open grain positions. How many dollars of unrealized gains and losses do you recognize with your mark to market entries?
5. Exposure to the volatility in the currency and interest rate markets. Can you quantify the exposure and how could the risk be mitigated?

 Demand markets have created new inflection points for both merchandisers and grain financial managers. Now is the time to discuss how to use the market structure to create an accurate, usable cash flow plan for the 2015/2016 harvest.

If you need to go through an in depth look at these topics for your grain company, click below for more information on our Grain Elevator Financing Course suitable for grain company managers, CFOs, and/ or bankers.