Blog – Finding Your Perfect Banking Match

Picture this: You’re sitting across from a bank manager in a pristine office, trying to explain why you need that seasonal overdraft to cover feed costs before the milk cheque arrives. Their blank stare tells you everything – they’ve never set foot on a farm, let alone understood the rhythm of agricultural cashflow. 

Sound familiar? If you’ve ever felt like your banker speaks a different language (and we don’t mean financial jargon), you’re not alone. Choosing the right banking partner is one of the most crucial decisions you’ll make as a farm owner, yet it’s often treated as an afterthought. 

 

Why Your Bank Choice Matters More Than You Think 

Your bank isn’t just a place to stash cash – they’re your business partner through thick and thin. The right banking relationship can mean the difference between weathering a tough season and facing serious financial pressure. When drought hits or milk prices drop, you want a banker who gets it, not one who needs a farming 101 lesson. 

 

 

What Makes a Great Agricultural Banking Partner? 

Industry Know-How That Actually Counts 

The best agricultural banks don’t just have farming clients – they live and breathe agribusiness. Look for banks with dedicated rural teams who understand seasonal cashflows, livestock values, and why your tractor is worth more to your operation than its book value suggests. 

These banks often have managers who’ve spent time around kitchen tables with farmers, learning the industry from the ground up. They know that a $2,500 Friesian cow might only be valued at $1,800 for lending purposes, and they can explain exactly why that matters for your borrowing capacity. 

The Human Factor: Finding Your Banking Champion 

A great bank manager is worth their weight in gold. They’re the person who’ll take your call during calving season, understand why you need flexibility around milk payment dates, and fight in your corner when head office needs convincing. 

Don’t write off the newer managers either. Sometimes fresh enthusiasm and a willingness to learn can trump years of experience. The graduate programme stars often have the backing of senior management and genuine hunger to build successful partnerships. 

Decision-Making Power That Works for You 

Here’s a question that might surprise your potential banker: “What’s your lending authority, and where do the big decisions get made?” 

You want to know if your local manager can approve your seasonal facility increase, or if every decision needs approval from someone in a city office who’s never seen a dairy shed. There’s a balance here – local authority means faster decisions, but multiple approval layers can provide valuable checks and balances. 

The Security Reality Check 

Let’s talk turkey about security. Banks aren’t charities – they need security for their loans. Understanding how this works puts you in a stronger negotiating position. 

For example, that million-dollar farm might only give you borrowing power of $650,000 (at 65% lending value). Your livestock? Probably valued conservatively at 60% of banking value. This isn’t the bank being difficult – it’s risk management 101. 

The smart move? Come to the conversation knowing these numbers already. 

Breaking Down the Numbers Game 

Want to impress your banker? Know your numbers inside and out. We’re talking: 

• Your equity position down to the dollar 

• Break-even payout points 

• Three years of budgets (including that crucial status quo scenario) 

• Historical accounts that tell your business story 

When you can confidently discuss these figures, you shift from borrower to business partner. You’re demonstrating that you understand your operation’s financial health and can make informed decisions. 

The Budget Reality 

We’ve heard every excuse in the book for not having a budget: “The payout changes too much,” or “I keep it all in my head.” Here’s the truth – farming has evolved from £50,000 operations to multi-million dollar businesses. You need budgets, and you need to track against them monthly. 

Your GST cycle is your friend here. Use those regular check-ins to monitor performance and spot issues before they become problems. 

Red Flags to Watch Out For 

Be cautious of banks where: 

• All decisions rest with one person (concentration risk works both ways) 

• Managers frequently change without explanation 

• Industry knowledge seems superficial or generic
  
  

What You Should Actually Want From Your Bank 

Beyond competitive rates, look for: 

• Transparency in all dealings 

• Easy contactability (especially during busy seasons) 

• Clear communication without jargon 

• Genuine industry understanding 

• Reasonable fees structure 

• Robust online banking (because who has time for branch visits during harvest?) 

• Quick response times when you need answers
  
  

Making the Switch 

If your current banking relationship isn’t working, don’t suffer in silence. A professional banking application package can open doors with new lenders and present your business in the best possible light. 

The key is preparation. Gather your financial information, understand your position, and present yourself as the professional business operator you are. 

Your Next Steps 

Banking relationships shouldn’t be about settling for “good enough.” You deserve a financial partner who understands your business, supports your goals, and adds real value beyond just holding your money. 

Whether you’re looking to switch banks or improve your current relationship, the foundation remains the same: know your numbers, understand your needs, and don’t be afraid to ask tough questions. 

Ready to find your perfect banking match? 

The team at CMK Accountants specialises in helping agricultural businesses navigate banking relationships. We can help you prepare professional banking applications, understand your financial position, and identify the right banking partner for your operation. 

Contact CMK today to discuss how we can help you get the banking relationship your farm deserves. 

This article is part of our Milking It series, following Kevin and Nicole’s journey toward farm ownership. To follow their progress and access more practical financial guidance for dairy farmers, visit dwn.co.nz/milking-it/