Top contractor tips for stress-free debt collection
Low commodity prices are always passed down the farming chain, so contractors that agree a well-organised repayment structure with their customers will always have an easier job collecting debts.
There are very few agricultural contractors who can afford to provide a free overdraft facility to their clients so, while they wait to be paid, their fuel, wage and finance bills are mounting up.
Regular invoicing
Adrian Marsh
Shropshire contractor and NAAC member Adrian Marsh reckons sending out daily or weekly invoices, and monthly statements, helps remind customers that there are bills to pay.
Mr Marsh tries to agree a date for the invoice to be paid before he does the job.
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“It may be seven days or 12 months, but as long as the customer keeps to the terms then I’m happy. I always remind them that a quicker service is always given to prompt payers – that’s often incentive enough for regular customers who rely on our services.”
Stay top of the priority list
Rob White
For seed processing contractors debt collection is equally important, particularly as the invoice drops on the farm desk in autumn when cashflow is stretched. It doesn’t always make for rapid repayment, according to Rob White of Evans and Pearce (pictured) in Dorset.
“Some customers are only visited once a year, so there is the temptation to think the invoice can go down the priority list, unlike the feed or agro-chemical bills. With so much resting on the autumn trading window for seed processors, effective credit control is very important.”
Solicitor’s tips
- Ensure you have proper terms and conditions
- Put in writing a contract for work
- Make sure you know who you are dealing with – whether it is a limited company or sole trader and if they are financially viable
- Confirm any changes to the original agreement in writing, such as extra work or a different charging rate
- Have good office procedures in place. The quicker the invoices are sent the better. Chase up non-payment
- Be professional in your dealings. Stand firm and be prepared to instruct solicitors to chase debts if you have to
Mr White also has a policy of calling customers before invoicing to check they are happy with the work done – that way it can’t become a reason for withholding payment.
“The problem is exacerbated when customers refuse to talk – when this happens, a visit is sometimes required to try and make positive contact. It’s a balance between maintaining a customer for the future while ensuring we meet our own cashflow demands.”
Solicitor’s view
If payment is still not forthcoming then help might be required, according to David Rogerson from Chattertons Solicitors.
Solicitors would normally send an initial letter of demand, but be prepared to follow this up with court proceedings, which will initially involve incurring your own legal costs and court fees.
If a court judgment is obtained, you will have to think about how to enforce it. It helps to have some knowledge of who you are working with and what assets they have.
Doing your homework at the beginning can reap rewards at this stage.
You can claim interest on outstanding monies as well as recovering the court fees and some limited legal costs. The rate of interest may well depend on what is in your terms and conditions.
