IPA responds to former director general's call for it to oppose clients extending payment periods

In response, Richard Lindsay, legal director of the IPA, told The Drum that he doubted that the Late Payment of Commercial Debts (Interest) Act 1998 was ‘little known’ as was claimed in the Telegraph piece highlighting the legal battle by James Morley, owner of Northern Ireland-based staff uniform supplier Blue Autumn who has issued several challenges against late-paying clients over the last six years.

“Whether companies choose to use it in order to claim interest from late payers is a matter for their discretion,” stated Lindsay. “Some might decide that doing so will be more trouble than it’s worth. Others might decide to follow Mr Morley’s lead and bring proceedings. Either way, those who seek to delay payment should realise that their suppliers may well have a statutory remedy, which, as of 16 March this year, is by way of the Late Payment of Commercial Debts Regulations 2013 which updated the 1998 Act.”

He added that the IPA had already published its views on companies that sought to extend payment terms and delay agency payments, saying that the IPA expected clients to pay agencies within “a reasonable time” as good business practice.

In May, the IPA’s finance director, Alex Hunter said that major agencies were experiencing pressure as a result of the weaknesses within the Payment Terms Regulation 2013, with a cap intended to be no more than 60 days.

“Those at the receiving end of this pressure are precisely those hired to add value to these major companies through their commercial creativity. The agencies have long helped small production houses’ cash flow by paying 50 per cent up front. To then find clients squeezing the agencies’ cash flow is decidedly not helpful to these creative industries as a whole,” he added.

Companies aiming to extend their payment periods include Proctor & Gamble which is attempting to move to a 75-day period from the current 45-day length.