Q & A with Tommy Jones, manager of marketing, agricultural financial services, John Deere Credit, Johnston, IA.

Tell us about the basics of Farm Plan and the accounts receivable management tool.

Farm Plan was originally developed by the Wisconsin Farm Equipment Dealers Association as a way to reduce accounts receivable, improve cash flow and reduce bad debts. Over the years, Farm Plan has expanded to include more than 5,000 agribusinesses of all types, including input retailers. Farm Plan will purchase existing receivables, and from that day forward, all new charges are applied to a producer's Farm Plan account. Those charges are funded back to the retailer within 48 hours. Once the customer has been approved by Farm Plan, those charges are non-recourse to the retailer. All billing, collections, etc., are then handled by Farm Plan. The retailer has increased efficiency by no longer carrying accounts receivable and having the business's cash flow tied up, and by no longer having bad debts with which to contend.

You've also got a Farm Plan program called the Retail Crop Input Finance Program. How is this program different from your accounts receivable program and what are the benefits to retailers?

Regular Farm Plan is designed to handle the day-to-day charges that a retailer typically carries from month to month and bills customers at the end of each month. It allows the retailer to turn those receivables into cash. Input Finance is a separate credit limit designed specifically for purchases sold with some type of extended terms. Through Input Finance, retailers have the ability to offer their customers numerous programs to drive additional sales. For instance, retailers can offer their customers 120 no payments, no interest instead of a cash discount for fertilizer. Or, they can provide their customers prime +1% financing through the end of the crop season.

Retailers are finding more ways to better serve their customers. Does working with Farm Plan allow retailers more time to accomplish that goal?

Yes. When retailers convert their accounts receivable to Farm Plan, they eliminate time employees spend on administrative tasks, time that they can then refocus on customer sales activities. Also, the cash generated from a retailer's accounts receivable can be used to capture additional early order discounts from manufacturers or invest in additional products or services.

In addition, when retailers offer Input Finance from Farm Plan, they can provide customers with expanded repayment options for the inputs they purchase.

What other technology tools are you using to ease your customers' burden in this time-consuming area?

John Deere Credit developed AgPrograms.com specifically to support retailers offering Input Finance through Farm Plan. With AgPrograms.com, a retailer can view the available programs, search the status of a customer's account and submit transactions for funding within 48 hours. For the 2004 crop season, JDC preapproved almost 300,000 customers for Input Finance Limits. Those customers can be accessed through AgPrograms.com. In addition, a retailer that registers through AgPrograms.com receives a report that lists the preapproved customers within a radius of its zip code.

The new planting season is here. What gets you excited as you look at market opportunities for retailers and their grower-customers in 2004?

Retailers have traditionally provided some level of financing for their customers, anywhere from month end to season end. That financing has been a big benefit to producers and has helped retailers strengthen their relationships with their customers. However, it has been a tremendous drag on cash flow for retailers. Farm Plan provides a retailer the ability to continue to provide that same level of value, and maybe even expand that value, while providing critical cash flow for the retailer. It's exciting to think about the ability for retailers to meet their customers' needs without having the same challenges they have faced in the past — draining cash flow and creating exposure to bad debts.

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