why payment terms take the p**s

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Marks and Spencer announced towards the end of last week that they were extending their payment terms for almost 500 of their suppliers (75 of which are based in the UK) from 60 to 75 days. OR, they’ll pay up straight away in return for a “substantial discount”.

I can’t believe that there hasn’t been more fuss about this in the press.  Asking your suppliers to effectively extend the free overdraft facility they already provide is taking the p**s, especially from a CSR point of view. If M&S don’t pay their suppliers on time, they in turn can’t pay their suppliers on time and eventually you create a worldwide and unsustainable lag between goods or services provided and payment received.  And as for requiring a “substantial discount” in order to pay up quickly, don’t get me started.

Ever since I went freelance I’ve been hardcore about getting paid within 30 days – after all, that’s what the agencies pay their staff on and freelancers are not only providing skills that would otherwise be provided by a salaried member of staff, they have the same mortgages, supermarket shops and bills going out each month too.  I’m lucky that the agencies I work with regularly (or at least my key contacts there) are decent about making sure I get paid more-or-less on time, but I’ve come across a few agencies who clearly would like to avoid paying me until 90 days – or in some cases just don’t have the funds in the bank to pay.  To be fair, that’s often because their biggest client’s bill is itself well overdue for payment.

In my little world, agencies who don’t pay up within a reasonable time frame get blacklisted, but I’m lucky as planning resource is pretty thin on the ground up here so I can afford to be assertive. And handily, I have access to a lot of free legal advice. But to achieve this on a broader scale would take the entire marketing industry as a whole to put their foot down and demand decent terms – so clients would then have no option other than to pay up as there would be no alternative supplier that would accept longer terms.

Perhaps I’ll put that on the wishlist after ‘no unpaid pitches’ for the IPA to sort out…

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