One of the biggest challenges in this business is getting paid for one's work. If you've been in the media planning and buying business for any length of time, you've witnessed first-hand how financial foul-ups can ruin the best media campaigns. Have you spent significant time dealing with media vendors on the phone, managing expectations as to when they can be paid for ads that have already run? Have you had to pull down ad campaigns because a client failed to pay the agency on time? Many of us have had to deal with these problems at one time or another. Many agencies assume some degree of financial risk on behalf of their clients. Often, they book media campaigns on a client's behalf, paying media vendors for the ad space and billing the client for that space, many times with a pre-determined markup. This model is risky, however. Agencies can be left "holding the bag" if a client can't pay for their media commitments for whatever reason. Over the years, agencies have tried to minimize their exposure to this potential problem through a variety of methods. One method introduces the notion of "sequential liability" into media contracts. That is, terms of an advertising agreement are conditional with respect to the client's ultimate liability for payment. This method is fairly common – sequential liability language appears in the IAB-AAAA Standard Terms and Conditions for online ad buys. Another method is to require payment from clients in advance of an ad flight. In many cases, clients dislike this method of doing business, as it requires payment in advance of services delivered. This can diminish a client's negotiating leverage. Yet another way for agencies to reduce their risk is to have media vendors bill the client directly. In many cases, this can also be undesirable from the client's perspective. After all, they hire agencies (in part) for their ability to manage ad campaigns, including the billing process. Approving various vendor invoices for payment, ensuring that ads were delivered, and fielding calls from vendors takes time away from a brand manager or VP of marketing, so it may not be the most desirable of methods. Still, agencies, clients and media vendors need to take steps to protect themselves from being the one left standing when the music stops. Media vendors are tired of hearing the same line from the agencies – "We'll be able to pay you when the client pays us." is common. But what happens if the client is not able to pay at all? The dot-com boom and subsequent contraction taught many agencies a valuable lesson about assuming financial responsibility for clients. As many dot-coms declared bankruptcy, their agencies were often left holding the bag from a financial standpoint. This put several agencies in precarious financial positions. After all, not only were these agencies not receiving full payment for placed media, but they were also missing out on fees and/or commissions. How can agencies protect themselves from this exposure to liability? While I'm not a lawyer, I've seen various payment policies in action. Here are some ways to cut down on the financial risk associated with the media business: