A harvest equipment list can get expensive very quickly.
The farm may need another grain trailer. A tractor is due for replacement. The loader is becoming unreliable. An auger needs upgrading. The truck will probably make it through another season, but nobody is particularly confident about it.
Individually, each purchase may make sense. The problem comes when several of them compete for the same cash at the same time.
Around Birchip and the Southern Mallee, broadacre cropping is a major part of the local agricultural landscape. Wheat, barley, canola, lentils and other crops are grown across the region, often alongside livestock.
As harvest gets closer, the finance question is therefore not always “Can we afford this asset?”
It can be:
Which purchases need to happen now, which can wait, and how much cash should we keep available for actually running the farm?
Deciding What Really Needs to Be Replaced
Not every item on the pre-harvest wish list needs financing.
Some equipment may comfortably handle another season.
Other assets may already be showing signs that delaying replacement could create more cost than benefit.
A useful starting point is to separate purchases into three groups.
Equipment that is essential for harvest.
Equipment that would materially improve capacity or efficiency.
Equipment that would be useful, but could reasonably wait.
A grain trailer that is limiting how quickly grain can be moved may belong in the first or second category.
A truck with increasingly frequent mechanical problems may have reached the point where reliability matters more than getting another year from it.
Another tractor might allow the business to operate more efficiently, but whether it needs to be purchased before harvest will depend on how the existing machinery is being used.
That distinction matters when deciding what to finance and how much additional debt the business should take on.
One Purchase Can Easily Become Three
Agricultural equipment purchases often have a flow-on effect.
Buying another grain trailer may highlight that another truck is needed to use the additional capacity properly.
A larger piece of equipment may require a different machinery trailer.
Additional contracting work may require another tractor as well as support equipment.
A replacement prime mover may also involve registration, insurance and other costs before it starts working.
That is why looking only at the advertised purchase price can be misleading.
Before committing to the main asset, it helps to consider what else will be needed to put it to work.
If the business spends most of its available cash on the first purchase and discovers another $30,000 or $50,000 is required elsewhere, the harvest cash position can tighten very quickly.
Should the Farm Pay Cash for the Equipment?
Many established farming businesses are accustomed to buying equipment when cash is available.
There is nothing inherently wrong with that.
But having cash and wanting to use all of it are two different things.
Harvest brings its own expenses.
There is diesel to buy, staff and contractors to pay, machinery to service and inevitable repairs to deal with.
There may also be fertiliser, chemical, seed, freight and supplier commitments sitting elsewhere in the farm’s cash cycle.
Using $100,000 or more of cash reserves for machinery might eliminate a loan repayment, but it also removes $100,000 of liquidity from the business.
For some businesses, financing all or part of an eligible asset can be a way of keeping more cash available for operations.
Another business may prefer a sizeable deposit.
A trade-in may reduce the amount borrowed.
The appropriate structure depends on the purchase, existing commitments and how much working cash the business wants to retain.
The Cheapest Purchase Is Not Always the Best Finance Decision
Used agricultural equipment can represent very good value.
A suitable second-hand grain trailer, tractor, truck, loader or other machine may do exactly the job required without the cost of buying new.
But the age of an asset can affect the finance.
Different lenders have different preferences around equipment age, value and finance term.
A newer tractor may fit one range of lending options while an older machine may need to be considered differently.
The same applies to trucks and trailers.
A low purchase price can look attractive, but if the asset is significantly older, the available finance term may be shorter than the buyer expected.
That can affect repayments and the overall cashflow impact of the purchase.
It is worth checking that before making the decision solely on purchase price.
Buying Equipment Privately
Agricultural assets frequently change hands between farmers, contractors and transport operators.
A suitable trailer or piece of machinery may never appear at a large dealership.
Depending on the asset, lender and transaction, finance may be available for an eligible private sale.
Private transactions can require additional checks before settlement.
The lender may need to establish ownership and correctly identify the equipment being financed.
If there is existing finance attached to the asset, that may also need to be addressed.
For a business that has found exactly the piece of equipment it needs before harvest, it is better to understand those requirements before promising the seller a settlement date.
Replacing Equipment That Still Has Finance Owing
Another common situation is replacing equipment before the existing loan has finished.
Perhaps a truck was financed several years ago and is now being traded.
Maybe a tractor no longer suits the operation.
Or the business has decided to upgrade a trailer while there is still a balance owing.
The first number to establish is the current payout.
Then compare that with the likely trade-in or sale value.
If the asset is worth more than the payout, the difference may contribute towards the replacement purchase.
If it is worth less, there is a shortfall that needs to be dealt with.
That does not necessarily prevent the replacement, but it needs to be known early.
Signing for another asset before understanding the existing payout can make the transaction unnecessarily complicated.
Growth Can Put Pressure on Working Capital
Harvest purchases are not always replacements.
Some businesses around Birchip may simply need more equipment because the operation has grown.
There may be more hectares to cover.
A contractor may have additional work booked.
More grain may need to be transported.
The business may be trying to reduce delays by adding another trailer, truck or piece of handling equipment.
Growth can be profitable while still consuming cash.
More work can mean more diesel, labour, maintenance and repairs before the extra income is received.
That is particularly important for contractors and transport businesses that invoice after work is completed.
An asset-finance approval solves the cost of purchasing the equipment.
It does not automatically solve the additional working-capital requirement created by using it.
When the Cashflow Problem Is Somewhere Else
Sometimes a business starts looking for equipment finance and discovers that the bigger issue is not the equipment.
ATO debt may already be consuming cash.
Customer invoices may be taking too long to turn into money in the bank.
Existing equipment loans may have accumulated over several seasons.
Business debt may be secured against property.
Or suppliers may need to be paid before the income from current work arrives.
In those circumstances, simply adding another asset loan may not address the full problem.
Depending on the business, the broader conversation could include working capital, debtor or invoice finance, refinancing or restructuring existing business debt.
The objective is not to combine products unnecessarily.
It is to identify what is actually creating pressure on the business.
Keep Some Capacity for the Unexpected
Harvest rarely follows the spreadsheet perfectly.
Equipment fails.
Tyres need replacing.
A contractor becomes unavailable.
Another machine is suddenly required.
Fuel costs more than expected.
An opportunity for additional work appears.
That is why preserving some financial capacity can matter.
If every available dollar has already been committed to equipment purchases before harvest starts, even a relatively manageable surprise can become difficult.
For some farming businesses, retaining cash is therefore part of the asset-finance decision rather than an afterthought.
It may be worth asking:
How much cash will be left after the purchase?
What bills are due during harvest?
Are there supplier commitments coming up?
What existing loan repayments are already running?
Could another equipment requirement arise?
How quickly will income from the season actually arrive?
Those questions give a much clearer picture than simply asking whether the business has enough cash to buy the equipment today.
Get the Finance Sorted Before the Equipment Is Needed
A purchase made several weeks before harvest usually provides more choices than one made after a breakdown.
There is more time to compare the asset with the existing equipment, establish trade-in and payout figures, gather any documents required and consider the finance structure.
When equipment becomes urgently necessary, the priority can quickly become getting anything that works.
For growers, contractors and agricultural transport businesses around Birchip, September is a useful time to identify the genuine weak points in the machinery and transport setup.
Thrive Broking can assist with finance for trucks, grain trailers, tractors and other eligible agricultural equipment, as well as broader business cashflow requirements where they are relevant.
If you have more than one purchase competing for cash before harvest, speak with Thrive Broking before committing to the equipment.
We can look at what is being purchased, what finance is already in place and how much working cash you want to retain, so you can consider the purchases as part of the whole operation rather than one asset at a time.