From time-to-time the 4A’s conducts surveys and information exchanges related to agency commercial terms, billing practices and operations practices. Recent publicity related to client payment terms prompted the Association to conduct a member survey on existing agency billing practices and client payment terms as a means to provide a factual foundation for marketplace consideration.
This July 2013 4A’s Agency Billing Practices and Client Payment Terms Survey Report contains robust, statistically sound information which provides the agency and advertiser communities with a mechanism for understanding predominant agency-advertiser practices and terms.
There has been a disproportionate amount of recent industry conversation triggered by a handful of marketers that have publicized plans to consider changes to their vendor payment terms. There is confusion about which media and marketing services, if any, are impacted by marketer proposed changes to vendor terms, and the extent of those changes is unclear.
Furthermore, the dynamics associated with the agency billing cycle for media and marketing services activities are not universally understood. This is significant because in order to accurately understand the effective implications of client payment terms, it is also necessary to understand the agency invoicing cycle that triggers the starter’s pistol for the payment time clock.
In order to foster more balanced and accurate industry discussion on vendor payment terms, and as a mechanism to provide robust information on actual marketplace conditions, the association conducted this 4A’s Agency Billing Practices and Client Payment Terms survey.
The last time that the 4A’s conducted a billing and payment timing practices survey was in 2010. The summary finding from the 2010 4A’s survey stated: “The predominant payment terms for media, production and agency commissions/fees is thirty (30) days.” The results from the current, July 2013, survey are consistent with the association’s prior findings. Survey-Key Findings:
#1 – The predominant practice is for clients to pay agency invoices within 30 days
#2 – Weighted payment terms are in the range of 32-36 days
#3 – Agencies pre-bill clients that operate with slower payment terms
#4 – Production activity billing practices are diverse.
The Survey Report
The 4A’s Agency Billing Practices and Client Payment Terms Survey Report provides important information related to agency-client commercial terms. The survey findings document the relative consistency of agency billing practices and client payment timing. The findings are consistent with prior 4A’s survey findings and there is relative consistency across service activities and media channels.
The 4A’s is making the results of this survey available to the advertising community in order to help communicate the facts on the ground.
The 4A’s believes that broad-based dissemination of this survey report will help ensure that industry precedent and prudent practices are not drowned out by the hype associated with a few isolated but high profile vendor payment announcements.