‘Irish contractors need to start charging interest’
Irish farm contractors need to start charging interest on work carried out for farmers, according to Bent Juul Jorgensen.
The CEO of the Danish Contractors Association (DME) was the keynote speaker at last week’s Association of Farm Contractors in Ireland (FCI) conference in Portlaoise.
The conference heard that Irish farm contractors support up to 10,000 jobs in rural areas, using 500m litres of diesel and 20,000 tractors each year.
“Contractors need to start charging interest. The problem is you [Irish contractors] like to drive tractors but not sending invoices,” he said.
Speaking from a Danish perspective, Jorgensen said invoices are sent out eight-to-14 days after the work is completed and after such time interest starts to incur.
This, he said, is something Irish contractors should consider, and if a farmer doesn’t pay once the money is due the contractor will not come to the farm next time.
Farmers are customers to the contractor, you have to take care of them as customers, they may be good friends but they still are customers.
He added that Irish contractors should be reluctant to take ‘black money’ or cash-in-hand for carrying out work, as “you cannot buy anything with black money.”
Irish contractors need to be careful, he said, and must be fully aware of the costs it takes to run a contracting business.
You have to act as a contractor not as a farmer, you have to divide it into two businesses, farming and contracting.
He also questioned the need for Irish contractors having 20,000 tractors, and wondered if all these vehicles were necessary and he suggested that if a tractor is only driving 500hr per year it is not making money.
Meanwhile, Michael Moroney, the Association’s incoming CEO said there are a number of areas the group needs to focus on in the coming years.
These include monitoring diesel and AdBlue prices, to look at how contractors price their work (hour vs acre) and how Irish operators can improve their businesses by taking examples from Holland and Denmark.
Insurance is a big issue and a big cost, we can learn from the experience in Holland and Denmark and learn from how they have done that.
Another key area which warrants consideration, he said, is tendering processes which have become more common with the increasing number of 300-500 cow dairy herds.
“Going into a tending process is something new. It is something that hasn’t been there before. We need to sit down a look at it,” he said.