dealers' Direct debit policy gaining farmer acceptance
IT MAY only be a matter of time before farmers will only be able to get credit from their local machinery dealer if they have been signed up to a direct debit. That was the key message at the recent FTMTA national conference held in Portlaoise.
The FTMTA has come up with the new proposal, called the Pro-Dealer Credit Policy, in a bid to stop machinery dealerships undermining their viability by giving loose credit terms that fail to bring in money that is owed.
Speaking at the conference, Garry Daly, FTMTA president, said many machinery dealerships now have levels of debt that are totally disproportionate to the turnover of their business.
He said that as well as the amount owed – in some cases up to €500,000 – there is also a substantial problem with the age of some of the debt.
The conference heard research that showed once a debt is six or more months old there is only a 50pc chance of collecting it in full.
Garry Daly explained: "We estimate it is costing dealerships up to 20pc of the book value of their debts to collect that money.
"To put it into context, it would cost a dealership with outstanding debts of €250,000 up to €50,000 to collect what is owed. This is made up of staff costs, cost of money and write-downs."
Asked whether farmers and contractors should be concerned with the new proposals, FTMTA chief executive Gary Ryan said the new policy very much allows for the provision of credit, but on an agreed and formalised basis.