'An egregious betrayal of trust': Comms Council calls out clients using COVID to extend payment terms
The Communications Council, on behalf of our members, has endorsed VoxComm's, a global joint agency association, announcement earlier this month, which took aim at clients using COVID-19 to delay payment or push for new terms.
"With the World trying to come to terms with the COVID-19 pandemic one would expect this to be even more true than ever before," VoxComm stated. "And yet we are hearing from our members all around the World that many of those same 'corporately responsible' companies are using the crisis to delay paying their agencies."
"Late payment is a pernicious habit that even cash rich companies employ to falsely enhance their liquidity ratios. It is directly at odds with their avowed policy of CSR. Agencies are de facto being asked to act as Banks for bigger Client companies. These companies bully agencies into longer payment terms or just flagrantly flout contractual payment terms."
In Australia, the Comms Council said the nation has so far been spared the very worst of COVID-19 both in terms of infection rates and economic impacts when compared with Europe and North America.
However, in common with its Northern Hemisphere counterparts, it's also experiencing the worrying, underlying trend whereby contracts are being drawn up by clients that include extended payment terms for agency services.
"We believe this is unacceptable: no client should ever expect its ad agency to bankroll its business. This is especially relevant during COVID-19, when agencies are having to manage their own businesses and cashflows more carefully than ever," The Comms Council stated. "That said, the current crisis has had a devastating impact on many industry sectors and Australian companies."
"It is gratifying to note that the bulk of clients and their ad agencies in this country have been partnering productively to find solutions for businesses who are experiencing genuine cashflow problems. Strong partnerships will always find mutually acceptable ways to overcome challenges by working together."
However, the council strongly believes it is an "egregious betrayal of trust" for any client to deliberately use the COVID-19 crisis as a convenient trigger to delay payment or extend contracted payment terms.