How long should you reasonably wait to get paid? The answer will vary, but I rather suspect that most businesses would estimate a month to forty days is reasonable? Adland is renowned for not being
exactly the promptest collection of payers, but not even the most sluggish agency would typically not expect terms to slip officially beyond two months.
Well, that would appear to be
what 2 Sisters Food Group is requiring as it trawls through London's agencies looking for a replacement for MediaCom. One of the reasons why the adland giant isn't involved in the pitch process may
have become clear this morning with Campaign's revelation that the owner of Goodfella's pizza and Fox's Biscuits is extending its payment terms to a staggering 104 days. Yes, that's right -- about
Let's not forget that many agencies will bill at the end of a month, and so at least a month's worth of work will have typically taken place before a payment
request is made. How can any self-respecting brand expect to commission a campaign that with the initial work involved, will mean an agency won't be paid for around four months? There will be a few
people pointing out that this is what happens already, but I'd suggest when bills take three to four months to pay it is usually because there is a query or one side is saving its own cash flow
position by deliberately holding back on payment, beyond the usually accepted terms.
2 Sisters is not alone. The Federation of Small Business deserves a pat on the back for naming and
shaming large companies who abuse their position through unfair payment terms. Alliance Boots is always there with its loathsome 90-day terms which it shares with Molson Coors and which TK Maxx
surpasses with an expected 94-day delay between invoicing and payment. At 104 days, however, 2 Sisters would shoot to the top of its "hall of shame" of late payers.
It underlines a
huge problem the Government has not been able to tackle. It published a Late Payment Code several years ago but offered no suggested fair terms, only saying details should be agreed up front and
adhered to. Hence, it was akin to letting businesses know they could get away with murder, as long as the victim was informed when the attack would take place. Cameron and Cable have recently promised
a review, but until someone grows a pair and says what is acceptable and what is not, then business will continue to wreck partners financially with odious payment terms.
At least with
adland now being dominated by a small handful of global networks, it is likely that the big guys who can do without the hassle of 120-day payment terms will follow MediaCom's lead and not bother to
court 2 Sisters. If nothing else, they would not want other clients to get any inkling that 104-day credit terms are anything other than laughable. However, that will almost certainly leave a smaller
agency desperate for a well-known brand to see if it can stretch to getting paid with a three a half month delay.
The irony of a large food brand based around gangster references in
its brand names -- and in its most famous creative, forcing a small agency into financial hardship just to be associated with it -- is too obvious a parallel to go unnoticed. Hopefully this is the
last we see of 120-day payment terms.