POV: The Crisis of Delayed Payments

3 strategies to accelerate payment cycles for better cash flow

Brands are feeling a budgetary squeeze amid persistent global economic uncertainty. Many are appealing to agencies to extend payment terms, a tactic that served them well during the pandemic (and, in some cases, even before). But the delayed payments have created a crisis in the years since, leading to supply chain woes and publishers burdened with less operating capital. 

A recent report from the American Association of Advertising Agencies (4As), “The Ripple Effects of Extending Payment Terms,” revealed that agency cash flow is tightening while credit costs rise. The average terms for clients paying overall fees to their agencies rose to 58.1 days. The report estimates that the borrowing costs for media agencies extending payments to 90 days and 120 days is $12 billion and $18 billion, respectively, and the financial pressure on publishers—the last to receive payment—may prove existential. 

“We’re hearing stories of people getting paid by agencies from net 120 to net 180,” says Patrick O’Leary, CEO and Founder of Boostr. “No publisher’s business is designed to have that kind of lagging cash flow. It’s putting stress on the business, showing up in their cash burn, profitability projections, and more. It’s a lot of stress, and it’s super painful for everyone.” 

Working with hundreds of publishers in different media spaces, Boostr has been privy to conversations about how late payments are impacting business—and what can be done to mitigate their effect.  

The state of payments

Even Pulitzer-winning publishers have folded in recent months (R.I.P. BuzzFeed News), while others like VICE have been acquired in bankruptcy sales, and once culture-shaping sites like Gawker have disappeared completely. Given this trend, media companies must urgently build financial resilience. Faster billing and avoiding underpayments are crucial pieces of the puzzle. 

As interest rates rise and borrowing costs increase for ad agencies and the demand side of the programmatic marketplace, late payments may be symptomatic of broader economic issues and emerging trends. Many suspect that what started as pressure from big brands to extend payments in order to appear more solvent to stakeholders or raise capital has trickled downstream, creating volatile new norms. 

“Agencies are having to prioritize which vendors to pay,” O’Leary says. “It’s very unhealthy.” 

How can you guarantee that you’re on top of everyone’s list to get paid? O’Leary suggests starting with what’s under your direct control. “What you can control,” he says, “you should be sure to get right.” 

As a publisher, reconciliation, and invoicing are yours to oversee. Let’s dive into how to do it right. 

#1 Be error-free

“When a publisher sends their invoice, it goes into one of two piles,” O’Leary explains. “There is the ‘no-error pile,’ where the numbers match, which gets paid faster. Then there is ‘pile two,’ where there are problems and the numbers don’t line up. Those take longer to resolve.” 

Every week, dozens of media company invoices get rejected because they’re off by even small amounts—cents or dollars. Billing with precision requires an OMS that connects to third-party delivery systems, manages reconciliations, and is as nuanced as your unique circumstances require—down to the appropriate decimal place. 

#2 Reconcile faster

Many publishers take as long as 15 days to reconcile their books—and that’s in a good month. Technology can accelerate reconciliation by 3x, so you can close your books in just three to five days.

Reconciliation can be time- and labor-intensive, which makes digital transformation in this arena all the more critical, ensuring speediness as well as parity. With software running the invoicing, records are rapidly checked, saving teams hours of work every month while avoiding errors—a win-win for expediting payments. 

#3 Be conservative

“Right now, it’s more important to be conservative and get your invoice approved than it is to maximize the billing amount,” O’Leary says. “Pick a number you know is going to be OK’d.” This means instead of claiming a few extra impressions, submit figures that won’t raise flags because they’re higher than what the ad server reported. 

Many publishers take this practice a step further by building in a slight discount to account for common traffic issues such as fraud, annotating it in the invoice to avoid any disputes that might prolong payment. 

Drive financial stability

Controlling everything within your means when it comes to payments requires practical solutions that add speed, agility, and accuracy to billing and reconciliation. For most, this involves technology that precisely tallies bills, looks for parallelism across systems, and automates the functions that too often fall on Rev Ops teams. Liberated from busy work, your best and brightest can focus on future-proofing activities, not just lining up numbers. 

Add speed to your operations by implementing technology built for precision. Ready to get started? Let’s talk.