The Marketing Agencies Association (MAA) has labelled some project-based payment terms as ‘greedy and grossly unfair,’ due to the negative impact they have on integrated and smaller agencies.
In some instances agencies are experiencing payment terms of 120 or 150 days, which is pushing some to the brink according to the MAA.
The MAA states that up to 72 per cent of agency income is derived from project-based deals and that this figure is on the up as a result of testing economic times.
Scott Knox, managing director of the MAA said, “We are seeing the worst payment terms in history and it’s been allowed to go on unchecked. There’s a large percentage of the industry that, unlike the bigger retained agencies, can’t absorb such punitive financial punishment.
“With cash flow more precarious at smaller agencies, exceptions need to be made and a stop put to these inexcusable bad habits”.