Advertising and marketing agencies are facing a crisis in their ability to get paid on time. Over the years, average payments to these agencies has gotten longer and longer. Many big companies are taking advantage of this and auctioning off work to the agency with the lowest bid, most free hours of work, and longest payment terms. This leaves agencies in a difficult position, often fighting with each other to do the best work for the lowest price. In fact, the Guardian reports that 66 percent of mid-sized agencies experienced problems with late payments. In addition, one in five small companies experience some type of “corporate bullying” in the form of late payments or excessively long payment terms.
Advertising and marketing agencies need to say “enough is enough” and start expecting businesses to pay you on time. Here are some accounts receivable management tips for advertising and marketing agencies to help you get paid faster.
CREATE A CREDIT POLICY
All of those working in the accounts receivable department should have a set credit policy to follow. This means that there is a clear set of defined rules for which accounts will be given the ability to pay on credit terms and what the net days to pay will be. There will also be a clear and defined set of rules for what will happen if that account does not pay on time, including the possibility of late payment fines or reporting to a credit bureau.
SEND ACCURATE INVOICES
One of the most common excuses for not paying on time is because the company received an inaccurate invoice or didn’t receive supporting documents needed to pay the invoice. By creating a template that includes all the crucial invoice information and automating the invoice presentment process, this entire issue becomes completely eliminated. Your customers will have to become more creative with their excuses because this one will be impossible to use.
KEEP COMMUNICATION DOCUMENTATION
The most important action you can take in order to improve you payment times is keeping track of every communication you have with the customer. If they promised to pay a week ago and they still haven’t paid, you have proof of that promise. If you agreed to a payment plan, you have proof of that as well. When your emails are integrated into your accounts receivable software, keeping track of this documentation is very simple.
These are just a few accounts receivable management tips for advertising and marketing agencies. There are many other steps you can take in order to stand your ground against companies that are unwilling to pay in a reasonable amount of time. Automating the process is one way to ensure that the typical poor excuses aren’t used.