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What the Industry is Saying about Payment Terms

December 9, 2013

By Bill Duggan, Group EVP, ANA

The just-released ANA white paper, “Payment Terms – Current Practices for Marketing Services,” includes some great perspective from sister trade associations.

“Extended payment terms will result in elevated supplier pricing and reduced supplier choice. It’s that simple,” per Tom Finneran, executive vice president, agency management services at the 4A’s. The 4A’s, of course, represents the agency community.

“The imposition of extended payment terms could cripple many post-production companies, drive them out of business, and deprive advertisers and their agencies of such valued and important resources as creative editorial houses, audio studios, color grading facilities, design shops, visual effects companies, and finishing houses,” per the Association of Independent Creative Editors, whose executive director is Burke Moody.

In addition, there has been press from Advertising Age and MediaPost.

Client-side marketers need to consider what is fair and how they would want to be treated when considering their payment term policies. If the payment terms they are suggesting to their suppliers would not be acceptable to them as suppliers, a re-think might be in order.

With 42 percent of survey respondents stating that there is a likelihood of changing payment terms for advertising/marketing services within the next year, it would make good business sense to review the pros and cons of such a change, as well as both near- and longer-term implications. Companies are encouraged to open honest dialogues with suppliers to assess the consequences.

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