Those in the agri-industry need to fully review and change their credit terms to get paid on time in a bid to ensure good cashflow and future viability.

That’s according to Sharon Farrell, founder of FACE credit consultancy, a credit management company based in Naas, who works across the small to medium-sized enterprise (SME) sector in which the agri-industry is an important employer, providing work to over 170,000 people.

Outlining the steps those involved in the sector can take to get paid on time, Sharon said that it is one of the industries that traditionally has extended very long credit terms.

This, she contended, is something that needs to change to improve cashflow for all, especially in this period of economic uncertainty.

“The agri-industry has its own particular difficulties around payments and while it’s totally understandable, it’s definitely time for change, as late payments throw up a plethora of problems for all involved in this sector," Sharon said.

“Traditionally, farmers draw down their grants in December and many who work in the sector may have been contracted to work or provide machinery in the previous February, for instance.

"This is not workable for all parties, and it is best practice to discuss and agree credit terms in advance of work commencing. This helps reduce the risk of contractors seeking different forms of debt or eating into any savings or assets," she said.

“If providers are not getting paid in a reasonable timeframe, they’re actually offering clients a loan - which is costing them dearly.

"They are paying the interest as they may have to dip into overdrafts and as we know the 8% interest rate on these facilities is punitive.

“The rising cost of living is really concentrating the minds of those in the agri-industry, and they need the guidance and know-how to overcome the huge problems that late payments cause.

“People are reticent to discuss money matters. They all know they need to and deserve to be paid on time, they just don’t like asking for it.

"It truly leaves people overexposed and very vulnerable financially," Sharon said.

“Changing behaviours can be very difficult but can be helped with standardisation of processes regarding getting paid on time," the founder continued.

“Nothing causes pressure in business quite like financial worries, and generally people don’t react or respond well when they are under pressure.

"What should be a simple request around payments can potentially become a battleground and it is all so avoidable."

“We have a new generation of farmers now and we need to make it acceptable to have the conversation around money with clients and service providers from the very start," Sharon contended.

"It has to be a normal and expected part of the business. Expectations need to be met on both sides.

"Being clear and upfront is the best way of doing business in the long term."

According to the founder of FACE Credit Consultancy, the general principles of good credit terms and practice remain the same across all industries.

“Being direct about credit terms is so much easier in the long term. I totally understand how businesses can be loath to broach the issue of credit terms as they are so happy to have received the business, but I cannot overstate the importance of being absolutely clear and unambiguous from day one. It truly saves untold problems down the line," Sharon contended.

“If you want strong professional relations with clients, which is paramount, be crystal clear about your credit terms."

This, she said, saves a lot of potential difficulties down the road, including preventing misunderstandings, delayed payment, maybe no payment, and soured relations.

"Nothing causes bad relations more than misunderstandings about payment," she added.

“It’s particularly hard on agri-industry start-ups as they can be decimated by outstanding credit and it’s such a shame," Sharon believes.

"The credit function should support growth in your business and not put your business under financial pressure.

“Professional credit management should fit seamlessly into a company. It focuses the mind on ensuring it is running smoothly, and finance is an inherent part of this.

"Cashflow is the lifeblood of every business and lack of it can strangle otherwise viable businesses, and given the agri-industry is such an important part of the Irish business landscape, I really urge them to review their credit terms as a matter of priority," Sharon said.

FACE credit consultancy tips on getting paid on time for the agri-industry: