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How do you solve a problem like... clients being slow to pay their agencies?


By Sam Bradley, Journalist

March 15, 2022 | 5 min read

Each week, we ask agency experts from across the world and the ad business for their take on a tough question facing the industry, from topical concerns to perennial pain points.

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How should agenices deal with slow-to-pay clients? / The Drum

We’ve been hearing a lot lately about the impact upon agencies of clients that are too slow to pay. Last week, both Unilever and Diageo were removed from the UK government’s Prompt Payment Code for failing to settle up in good time – a moment that reminded many of this familiar problem and how it can acutely affect smaller agency businesses.

So, what can agencies do about it?

How do you solve a problem like... clients being slow to pay their agencies?

steve gill

Steve Gill, managing director, Forepoint

The important flip side of running a successful, creative business is the ability to manage the finances. Be aware of your lifeblood – your ‘cashflow.’ After 30 years with no borrowings, we’d like to offer some practical advice: use a tool such as Creditsafe to check a client’s risk score and DBT; establish and agree payment terms in advance; submit clear, concise, accurate, timely invoices; invoice often – if possible, in advance, or staged payments; offer monthly retainer packages; consider alternative payment platforms and incentives for earlier payment; and finally, don’t be afraid to chase – you’ve got to be prepared to be a polite rottweiler.

luciana andreoni

Luciana Andreoni, managing partner, True & North

Empathy needs to be built on both sides to tackle the late payment problem. Late payment often arises when a larger business sees payment processing as an annoying administrative task, and when there’s little understanding of the serious impact it can have on a supplier’s ability to function. A marketing manager/assistant for a larger organization can fail to empathize when they never have to worry about cash flow. So the solution is raising awareness with client teams of the impact their tardiness can have. Honesty is a powerful tool more likely to get results than pressure and pestering without context.

matt byrne

Matt Byrne, chief revenue officer, Vane

Balancing customer and supplier payment terms is key for any business, especially in the media industry. The knock-on effect of big advertisers slowing payments can spread rapidly.

The decision for most businesses is do you pass on these long payment terms to your own suppliers, or absorb them? Paying your suppliers on time might actually give you a competitive advantage.

But how is that possible without reducing your working capital? Receivables finance will allow a business to convert receivables back to cash, neutralizing long payment terms. And for growing companies looking to fundraise, it will also keep investors happy, as they’d rather finance growth than bankroll cashflow.

tyler mcclain

Tyler McClain, senior producer, Special Operations Studios

Our finance team is anchored by the leadership stylings of Rhianna: “Bitch better have my money.”

But on a serious note, one of our larger clients offers a net 60-day payment term, so if we want to be paid faster, especially when it comes to video production costs, we can utilize their virtual credit card payment system. Of course if we do this we have to factor in processing fees, but sometimes we take them up on this because cashflow for small businesses, as we all know, can be a challenge.

hannah lynd

Hannah Lynd, head of operations, Stink Studios London

Getting paid in a timely way is always important for independent agencies, with clients’ commercial terms becoming increasingly demanding. We’ve always tried to ensure we’re meeting clients halfway with regards to their payment process. By communicating our payment schedule upfront and understanding any potential operational bottlenecks with client procurement teams, we manage to avoid getting to the stage of becoming a headache for clients by constantly chasing and badgering. Our brilliant accounts people are totally embedded in our team, and they do an amazing job building relationships, communicating regularly and earning the respect from clients to make sure we’re getting paid on time.

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