From here to eternity

WIMPY copyAccording to published reports in Ad Age, Procter & Gamble is now extending the time it takes to pay agencies.

Effective immediately, P&G will stretch payment terms to 75 days from the previous 45-day limit.

But, if you think waiting two-and-a-half months to be paid is brutal, check this out: Ad Age reports that Anheuser-Busch Inbev recently set its payment terms to 120 days AFTER it receives an invoice. So, if one were to bill A-B as the flowers are just beginning to blossom, it may not receive payment until the first frost occurs. Talk about a chilling effect!

Stretching out agency payment terms is a direct result of the rise in power and prestige of the procurement officer. Hired specifically to cut costs and improve profits, the average procurement officer sees no difference whatsoever between a strategic public relations firm and, say, a local Staples. He demands the lowest costs possible and strings along the payment to the most ridiculous lengths imaginable. And, his incentive program is based upon how hard he squeezes the company's suppliers. Nice way to make a living, no?

And, while PR trade publications have spotlighted 'enlightened' procurement officers who view their agencies as partners, the facts are very much the opposite. The P in procurement stands for pain, not partner.

We once represented a large company whose procurement officer insisted we front ALL of their out-of-pocket expenses for events. This was not a minimal request. At various points in time, we were on the hook for paying $100,000, or more, to secure venues, talent, street teams, etc. And, we weren't reimbursed until months afterwards. In effect, a $16 million agency was forced to be a Fortune 500 corporation's bank.

I'd like to see our industry trade groups and media do more than shine a spotlight on the small number of procurement officers who respect what we do and understand our need for prompt payment. I think it's high time a PR trade publish a story like the one in Ad Age that outs these penny-pinching penny pushers.

Make no mistake that, as they continue to wield more and more power and stretch out payments to an even more egregious period of time, procurement officers will begin to impact many firms' ability to attract and retain top talent (because a cash-strapped agency is a non-competitive one). And, our industry's journalists have a responsibility to cover the story.

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