A worrying idea: extended payment terms

A worrying idea has been circulating this week; that big companies can use their weight to put pressure on their marketing suppliers to extend the payment terms. This is both unfair and unrealistic for the majority of marketing agencies. If you went to a shop or a restaurant you would not be allowed to get away with saying: “I’m a regular customer, let me pay later on”. So big brands must work with their marketing supplier to do everything they can to pay them on time.

No one can deny that brands, particularly in exposed sectors such as finance, automotive and retail are having a tough time of it, so it’s understandable that they are looking to cut costs. However targeting the marketing supplier will not help their cause. The idea that the pressure on them can be moved onto their suppliers will end up with those who market them and arguably are responsible for attracting their customers, going bust.  

Meanwhile marketing agencies have their own pressures with budgets being cut, clients demanding more and radical shifts in the media landscape. Further to this agencies have a responsibility to their clients, employees and their own suppliers to keep on top of their finances. So brands must stop and recognise that agencies are businesses in their own right.

Unfortunately I think many agencies will find themselves facing these kinds of disagreements over the next year. My advice to them, if a dispute with a client does arise is deal with the problem head on.  And remember there are plenty of resources you can use to help, including the trade bodies that are there to defend and support you.