I distinctly remember my first boss at Hill & Knowlton telling me Uniroyal was very late in paying its invoices and that I needed to collect the outstanding monies ASAP. ”This makes both of us look really bad to management,” he warned me.
But, before I could pick up the phone, my boss provided some additional counseling. “Come up with a list of day-to-day activities, provide Lynn with updates and, then, at the very end, apologize to her for having to even mention the subject of money, but ask if she'd mind checking on our invoices,” he suggested.
I did as I was told. And, since Hill & Knowlton still exists, I'm assuming they eventually collected those outstanding invoices.
Sadly, though, and judging by the way our staff views overdue client payments, my former boss's POV remains alive and well.
My business partner, Ed, and our CFO, Debbie, are changing that mindset. They have to because, whether it's a lingering hangover from the 2008 market crash as Ed suggests, or some other reason, lots of clients are very, very late in paying us.
That's wrong for a number of reasons. Clients hire PR firms to be their strategic business partners. Partners don't string along other partners when it comes to payment. Further, the best clients realize that an agonizingly slow payment process impacts their image and reputation, as well as their organizations.
I was sitting alongside one of our senior partners when she alerted a client to an unbelievably late series of invoices. The client was not only embarrassed, she actually interrupted the meeting to speak with her counterpart in accounts payable. That's what I call a caring and compassionate client.
Sadly, though, she's in the minority. Some clients 'lose' our invoices. Others claim to have never received them in the first place. And, then there are those who have been instructed by procurement not to pay any vendor in less than 180 days.
We've agreed to tell a few of these tardy clients that we're prepared to stop all work until we're paid. We're also adding 'payment status' to every single reporting chart we use to review a campaign's progress with a client. Last, but not least, we're re-educating our staff on the importance of collections to our agency's health. No one needs to apologize when asking a client to promptly pay their bills. In fact, we're suggesting it kick-off some conversations because it's SO important.
I'd like to see our industry trade press address this issue. It's another one of those uncomfortable realities that plague every agency, large and small, but is ignored completely by the watchdogs that cover our field.
In my opinion, invoicing means never having to say you're sorry.
Thanks Ronn. Really appreciate the comment. My all-time favorite collections story comes from those lazy, hazy, crazy dotcom days. One of the prototypical, me-too varieties fired us when they ran out of money and then, to help pay their creditors, sued us to try to pay their debts. Needless to say, that never happened.
Absolutely brilliant post. Did we agree to loan them money ? Its the same as extending to non-payers a loan.
Ronn Torossian, 5WPR
Oh yeah, and this has only gotten worse, not better, Julie. And, then there are the lovely negotiations that go down when a relationship ends and outstanding monies haven’t been paid. That’s when the ex-client starts expressing his sorrow that the agency didn’t meet his expectations and asks why should he have to pay the full amount agreed to in writing? Reprehensible and, as I say, completely glossed over by the PR trades.
How would they like their campaign to come to a screeching halt after 180 days of non-payment? I think it’s reprehensible that reputable PR firms that consistently deliver have to chase their hard-earned money.
In the few instances where I have had a retainer client, I put a late fee in the contract. If you specify terms of payment within 30 days of invoice,
give them a 15-day grace period, then charge them 1.5% (or whatever you decide should be the applicable rate) and then add it on to the next invoice.
Just like paying a credit card balance or your mortgage.
Once they see that “late fee” charge, they may begin to wake up.
I say the same thing to the powers that be here. We have actually turned into an interest-free bank giving loans away at will and that in turn, leads to reductions in the actual invoices because it has been so long. I only suggested this morning that interest start to accrue on payments more than 30 days in arrears and let them see them on the so called “reminder statements” they receive every month. Glad to see someone is proactive in this regard. I would never think to not pay a bill and if short on cash, I would tell that person/entity. I hate the “we never received the invoices” line. Now – how was last night?
Great post, Steve. Unfortunately PR people act like battered wives who keep coming back to their abuser when it comes to deadbeat clients. Be clear from the start about your policies, be very polite, but not apologetic, stand your ground, and be ready to walk away. Instead of trying to change a “bad” client, focus your time and energy on the good clients.
Great post, Steve. Unfortunately PR people act like battered wives who keep coming back to their abuser when it comes to deadbeat clients. Be clear from the start about your policies, be very polite, but not apologetic, stand your ground, and be ready to walk away. Instead of trying to change a “bad” client, focus your time and energy on the good clients
I say the same thing to the powers that be here. We have actually turned into an interest-free bank giving loans away at will and that in turn, leads to reductions in the actual invoices because it has been so long. I only suggested this morning that interest start to accrue on payments more than 30 days in arrears and let them see them on the so called “reminder statements” they receive every month. Glad to see someone is proactive in this regard. I would never think to not pay a bill and if short on cash, I would tell that person/entity. I hate the “we never received the invoices” line. Now – how was last night?