DMEXCO and the Growing Pains of 90 Day Payment Terms
In business, the saying goes: ‘cash is king’.
FastPay
This adage is perhaps never truer than when it comes to media and advertising technology companies. Slow growing sales is like a serious illness – it will kill the company eventually. But a lack of cash flow? It’s like a heart attack. It can kill the company almost immediately!
Many attending DMEXCO in Cologne this month will be able to relate to this feeling. For many fast-growing businesses, it’s paradoxical that at the precise point they start to be successful, growth can be stifled.
These growing pains will be on some people’s minds as they board the plane for Germany. One possible solution could begin with having a coffee and a chat with the team and I at FastPay out in Cologne.
At FastPay, we work with leading ad networks, ad tech companies and publishers. Our aim is to help optimise working capital in an industry where increasingly slow advertiser payments are causing huge challenges for growing businesses. We get it and we want to help you do something about it. If revenue is coming in slower than your payments to vendors are going out, this ‘squeeze’ means businesses have to in effect carry a cash float because of the delay.
The need has never been greater and the challenge is stark. We recently analysed our internal databank of client invoices and in an upcoming white paper we will reveal that agencies and ad tech vendors must now wait an average of around 90 days (and growing) to be compensated for their work. The situation is getting worse. FastPay’s data factors 31,529 client-invoice payments, from January 2013, when the average agency invoice was paid within 66 days sales outstanding, through August of this year. The data reveals that 90-day payment and more has become “the new normal.”
Reduced venture capital investment into advertising technology, along with tighter corporate treasury mandates, have drained liquidity in the digital media ecosystem. On a macro level, large brand advertisers are taking an increasingly deliberate approach to cash management when it comes to accounts payable. A wide spectrum of large multi-nationals and other ad buyers continue to extend payment terms to their suppliers. This trend has also disrupted digital media supply chains, where payment terms between advertisers and their agency vendors have slowed by an average of 20 days over 2013 numbers.
We would like you to be the first to read FastPay’s forthcoming white paper and to learn how you can mitigate against increasingly arduous payment terms and diminishing access to liquidity by signing up here.
With proprietary technology, FastPay is growing fast and now dynamically assesses the creditworthiness of borrowers, meaning we can issue working capital solutions between £5K and £25M in 48 hours or less. Since inception, FastPay has originated over $1.3B in loans and has access to hundreds of millions in deployable capital from a AAA investor capital base.
After proving the value of the model the US, FastPay is now rapidly expanding into Europe having recently established a London office. The team will be out in DMEXCO to discuss a suite of working capital finance products with Europe's fastest growing media businesses. If you'd like to speak to us about how we can help your business maximise its growth in 2016 and beyond, let us know and we'll be in touch to schedule a time to meet.
Matt Byrne, UK Director at FastPay.