The weather this year has played havoc with farmers, with a significant number facing the worst conditions they have experienced.
This is going to place a significant amount of pressure on those within the agricultural industry, including from a financial perspective.
While everyone will be impacted to differing degrees, it will nevertheless place a burden on all those in agriculture and the broader industry.
This highlights the need to be proactive about your finances, from the perspective of paying debts as well as making sure you are paid. There are some simple things that can be done for both.
In respect of where you are owed money, there are a number of things that can be done to maximise your prospects of getting paid, including the following:
- Making sure you have a written contract which includes terms dealing with what happens if you don't get paid, including whether you are able to charge interest on any unpaid amounts.
- Making sure you are aware of who you are entering into the contract with- for example, is it a company, a partnership or an individual. This will be important as it will dictate who you can chase for what you are owed.
- Being pro-active when it comes to debt recovery. In our experience chasing up payment can often be left longer than it should, which can be for a range of reasons, including that people focus more on invoicing than actually recovering the money or there is a sense of awkwardness about chasing outstanding money. The longer this is left, invariably the harder it becomes to recover.
- Considering whether to continue to provide the goods, service, etc if there has been an extended period of non-payment. We often see the situation where someone continues a business relationship, only for the situation to get worse and worse in terms of what they are owed.
Unfortunately for some, the shoe will be on the other foot and they will owe money to others.
In our experience, one of the most important things for someone to do where they find themselves in this situation is to have an open dialogue with those they owe money to- sticking your head in the sand is only going to make matters worse. Finding a longer-term solution is always going to lead to better outcomes.
One important tool for farmers is the Farm Debt Mediation Act 2018.
The stated purpose of this Act is to 'provide for the efficient and equitable resolution of farm debt disputes by requiring creditors to provide farmers with the opportunity to have the disputes referred to mediation before the creditors are able to take possession of property or other enforcement action under farm mortgages'.
The Act has a broad application and requires creditors which are owed money that is secured wholly or partly by a farm mortgage to give notice prior to taking enforcement action against a farmer.
Under the Act, a farmer can request mediation and, whilst the creditor does not have to agree to mediation, if the creditor does not do so, the Act makes it very difficult for the creditor to proceed with taking enforcement action, which would typically include steps such as tyring to sell the property.
This mediation process can potentially lead to agreed outcomes which prevent the need for further steps to be taken, such as the property being sold.
Whether you owe money or are owed money, it is important to be proactive in managing your finances so as to avoid these situations getting out of hand.
This article was published in The Stock Journal on 19 October, 2024.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.