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Re: Late payment from advertiser

From: Cliff Kurtzman <moderator_at_o-a.com>
Date: Mon 21 Aug 2006 20:15:15 -0500

I guess I mostly disagree in part with Adam on this topic.

I think that people and companies have an obligations to honor their
contracts. Sometimes circumstances can prevent someone from honoring
their agreement, despite their best intentions to do so. When a
company finds it is unable to make a payment it owes to someone, the
appropriate thing for them to do is to be honest with the creditor
regarding the circumstances and to give them a reasonable expectation
of what needs to happen in order for them to be able to honor their
obligation. Ignoring the creditor is not an acceptable way to deal
with the situation. The only time a creditor doesn't make a payment
due within net 30 terms is if either 1) it is unable to make the
payment; or 2) it chooses not to make the payment so it can continue
to make interest on the float. It is the contractual right of the
publisher to have use of that money within the due date of the
payment. An agency which withholds money from the publisher to
continue to earn interest on the float is stealing from the publisher.

It is absolutely not acceptable for an agency to pay a bill net 90
(60 days late) when it has an obligation to pay it net 30. If they
want to pay their bills net 90, then they need to negotiate that into
the contract. When I do work for someone under which they are
obligated to pay me under net 30 terms, I always include language in
the contract indicating the rate of interest due (1.5% per month) if
payments are made late.

It does not imply in any way, shape or form that a creditor is in
financial distress for it to expect that its contracts are honored
and payments are made on a timely basis. On the other hand, if
someone fails to meet their contractual obligations to a creditor,
then that certainly can imply financial difficulty.

Having run an agency in the past, it was fairly typical for us to put
language in our contracts with publishers indicating that our agency
had no liability to make a payment on an ad buy unless we had
received payment for that ad buy from our client (the advertiser).
Without that kind of language, the agency has no choice but to pay
for the ad buy under the terms of their agreement even if they
haven't yet received payment from their client.

On the web sites for which I am involved in selling advertising, I
always insist on payment in advance, although I will occasionally
extend a grace period to advertisers who are renewing ad buys. For
clients for whom I do consulting work, I offer a significant discount
on my normal hourly rates if they hire me on a retainer basis, paid
in advance. It is hard to me to think of any significant business
that I have lost in the past by insisting on payment in advance.

I think that Jacky is looking for payment for advertising that was
placed on their site by a network. In this instance, there was no
feasible way for payment to be made in advance. If payment is 30 days
past a net 30 due date, and there is no response from the company
despite inquiries from counsel, posting a notice in a forum like this
can be useful in determining if others are having similar experiences
and to provide warnings to others about the risks of taking ads from
the same source. However, it is absolutely essential that any
statements made about the creditor be truthful and factual if one is
to avoid the possibility of suit for defamation or tortuous
interference with business.

If the creditor is being unresponsive, then taking legal action
against the creditor can sometimes motivate the creditor to make
paying the publisher a priority compared to paying other debts. The
longer the publisher waits, the less likely it is that they will ever
get paid. But I emphasize that legal action should usually only be
contemplated when the creditor is unresponsive or there is evidence
they are being untruthful.

--Cliff

Clifford R. Kurtzman
CEO | Moderator
ADASTRO Incorporated | The Online Advertising Discussion List
http://www.adastro.com | http://www.o-a.com
(281) 480-6300




Received on Mon Aug 21 2006 - 20:15:15 CDT


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