Pay us the compliment of paying us on time
Values – throw a stick into the PR sector and more than likely it will hit something related to values. Many agencies preach the gospel of values to their clients, hammering home the need for them to have a clearly defined set and for that set to be used to shape, inform and drive their communications.
Which is why it is ironic that the PR sector has to deal with an issue like payment terms with clients.
While there are some behemoths in the PR sector, it is an industry with a long tail of small and medium sized companies, businesses for whom late payment of invoices has a big impact, sometimes to the extent that it is a threat to their continued existence – they are often in thrall to the God of cashflow.
We are one such typical mid sized agency, luckily in a position where the vast majority of our clients do pay us within 30 days. However, the small number that don’t have a disproportionate impact on us as a business. Our finance team spends on average at least a day a month chasing clients for late payment, an additional cost that we have to absorb into our overhead.
Of course, there is no point moaning about this if we don’t practice what we preach. As a result, we always pay our own suppliers within thirty days and aim to pay them within 14 days where possible. As a result, we end up effectively subsidising our late paying clients, taking a hit on our own cashflow.
So what can be done to tackle the issue of late payment?
Well, we have 30 days terms written into our standard contract and will challenge any client to explain to us why they aren’t willing to sign up to those terms, while also explaining to them why we have them in the first place, in relation to our own commitment to our suppliers as well as the impact longer payment terms have on our viability as a business. If you feel uncomfortable with such a direct approach, then encouraging them to sign up to the Prompt Payment Code is another way of getting the issue onto their radar.
If you are worried that such an approach will lead to you losing clients, then you have the wrong clients. If you believe the work you do is of value, the least you should expect is to be paid on time for the value you have created.
The full version of this article can be found on PRCA here.