In the early 1900s, hay buyers who didn't pay for their hay might have seen their names on the National Hay Association's deadbeat list.
While that tactic is no longer used to embarrass buyers into settling their debts, the problem with delinquent accounts persists.
"Some growers, dealers and brokers have no problems at all, and in other instances, people are always nursing non-payments," says Don Kieffer, NHA's executive director.
Kieffer encourages buyers and sellers to use contracts. "With hay transactions, buyers and sellers rarely make hard-and-fast contracts like they do when they're marketing grain."
Barb Kinnan, marketing director for the Nebraska Alfalfa Marketing Association (NAMA), concurs.
"I have a hard time convincing growers to use contracts. A lot of hay transactions are done on a friendly handshake, but a handshake isn't going to back you up in court," she says.
A hay contract should include bank references, terms, test results, weights and the form of payment, says Kinnan. The buyer should sign and return it to the seller before delivery.
"A hay contract should also indicate the time frame in which all of the hay should be either picked up or delivered. An open-ended contract can go on for a long time."
Other ways to help ensure payment: Take the time to build rapport with clients and always deal fairly, says Kinnan.
"Building relationships is a major key to getting paid for the hay you sell. If you're just out to make a quick buck, your chances of getting hung financially are probably greater than if you take the time to build a customer base and strive for repeat business."
Prior to taking her job at NAMA, Kinnan was the marketing manager for Lane Kugler's Cozad, NE, operation.
"My typical routine was to ask each new customer who his or her banker was. Then I would visit with that banker about whether or not we should ship the hay. We sold thousands of tons of hay every year, and I only had one bad account. We just had to be very, very patient at times."
Richard Alden checks with each prospective client's bank before shipping. But first he asks the client to fax a letter of credit from the banker.
"So far, that's worked very well for us. I guess we could get a letter of credit and the buyer could decide not to pay, but we haven't had any problems," says Alden, who farms 2,000 acres near Auburn, NE, with his son. "When we sell hay several states away, we don't want to leave too much to chance; we try to make it as foolproof as we possibly can.
"The minute the hay is unloaded at a customer's farm, I expect him to drop a check in the mail. I want to get paid within three to four days," says Alden. "If I haven't received the check within that time, I call the buyer and remind him to send it immediately."
Walton, NY, hay dealer and grower Bob Bishop agrees that it's a good idea to get credit references from new customers. But he doesn't always take the time to do that.
"There have been a few times when we've shipped hay not really knowing who the buyers were and just trusting they'll send checks," says Bishop, NHA's current president. "That's not the way to do it, but you get busy and the phones are ringing and you just hope people are honest."
Bishop's been left holding the bag a few times by customers who declared bankruptcy after receiving hay. But he usually doesn't have much trouble collecting because, for the most part, he works with the same group of customers year after year.
"We've noticed that, when milk prices are lower, it sometimes takes a little bit longer to get paid," says Bishop.
Asking buyers for money in advance is another payment option, Kinnan suggests.
"Wiring money is a simple, quick procedure and only costs around $20 per transaction. A seller just needs to give the buyer his bank's identification and account numbers," says Kinnan. "It's a safe procedure, and it's done quite often."
In multiload transactions, ask the buyer to pay for one or two loads in advance.
"This is similar to paying the last month's rent if you sign a lease for an apartment," she says. "The buyer pays for two loads before he gets any hay. Then he pays for each load as it comes, except for the final two loads."
Kinnan also advises talking with others who've dealt with your potential clients.
"Our NAMA members will call one another and ask, 'How did you get along with this particular person?' Credit references within your forage association work very well."
Hay sellers also bear a responsibility. That's to deal fairly and always deliver the quality expected, Kinnan adds.
"They need to be careful to accurately represent what they are trying to sell. Every load has to be consistent, and if you see a bad bale, don't load it."
"Problems most often arise when the quality is different than what was previously agreed upon," adds NHA's Kieffer. "If a buyer isn't satisfied with the load of hay he's just received, he needs to notify the seller immediately. He should never wait to complain about the quality until after the hay's been fed."