Agricultural contractors “can no longer act as unofficial bankers” for Irish farmers, according to the Association of Farm & Forestry Contractors in Ireland (FCI) – which is encouraging its members to charge interest on overdue accounts.
Following the unveiling of the FCI’s ‘Contracting Charges Guide‘ for 2020, the association made the comments in relation to credit and debt.
“The cost of farmer credit continues to rise for farm contractors. Some contractors have outstanding debt from 2019,” the organisation highlighted.
FCI is encouraging all contractors to issue monthly or weekly invoices followed by monthly statements in order to help to manage cash-flow.
Continuing, the association highlighted that the level of long-term debt level in farm contracting in Ireland is estimated at more than €60 million.
“The cost of farm debt to the farm contracting sector in Ireland is close to €3.5 million each year in interest costs alone, based on a 6% interest rate.
“Farm and forestry contractors can no longer act as unofficial bankers through millions of euro of long-term extended credit to Irish farmers,” the organisation said.
The FCI is also encouraging all farm and forestry contractors to charge interest on overdue invoiced accounts.
“The association has developed a simple excel-based ready system, and information fact-sheet which has been emailed to all members to provide them with an easy calculation system for interest on overdue accounts.”
Commenting, Michael Moroney, FCI chief executive officer, said:
“As suppliers of services to farms, farm and forestry contractors are legally entitled but not obliged to charge interest on overdue accounts, just like all other suppliers to farms.
The contractor must issue invoices on a minimum of a monthly basis in order to calculate interest on late account payments.
“If your contracting business is the only one not sending invoices and not charging interest on overdue accounts, you will be the last to be paid,” Moroney warned.