Media agencies in Australia report that payment terms are under increased pressure due to COVID-19.
Sophie Madden, CEO of the Media Federation of Australia (MFA), was responding to a report that some brands, citing the pandemic, have been demanding delayed payment terms with new contracts.
She says this is an unfair and irresponsible practice.
"Delaying payment puts media agencies at risk as they are responsible for payment to the media owners and bear the full financial costs for the media buy," she says.
"It’s particularly concerning because this comes after years of clients pushing payment terms beyond industry norms – in some cases, 90-120 days, putting extreme financial pressure on agencies operating in a competitive market.
"However, we know that the majority of clients and agencies are working in partnership to find solutions in this challenging environment and therefore believe this is an issue we can overcome together."
The Communications Council (TCC), a peak industry body, calls the underlying trend a "convenient" excuse and a "betrayal of trust.
"It is gratifying to note that the bulk of clients and their ad agencies in this country have been partnering productively to find solutions for businesses who are experiencing genuine cashflow problems," says Tony Hale, the CEO of the Communications Council.
John Broome, CEO Australian Association of National Advertisers (AANA): "In a crisis, productive strategic partnerships are even more valuable to maintain and foster. Therefore any instances where advertisers are using a crisis to impose additional payment terms on their agency partner is counter intuitive to me. Fortunately I do not know of any instances of this happening in Australia.”
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