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IPA view on extending payment terms

Says IPA Finance Director, Alex Hunter; “The extension by cash rich multinationals to take up to 120 days to settle their debts to ad agencies (FT 31st May 2013) is not confined to the States.

31/05/2013

The major agencies centred on London have seen the same pressure. This unfortunately highlights the weakness of the Payment Terms Regulation 2013 which was intended to cap payment terms to 60 days.

It is surely nonsensical that agencies – many of whom are SMEs – should act as banker to these major corporations merely so that these corporate giants can demonstrate strong balance sheets to their analysts each quarter. With interest rates at an all time low there is no real commercial value in unilaterally extending payment terms.

Those at the receiving end of this pressure are precisely those hired to add value to these major companies through their commercial creativity. The agencies have long helped small production houses’ cash flow by paying 50% up front. To then find clients squeezing the agencies’ cash flow is decidedly not helpful to these creative industries as a whole”.

To view the full article from the Financial Times, click here

Last updated 31/05/2013


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