Many of the operating agencies, from Outdoor, Creative to Public Relations businesses in Nigeria’s over N150 billion marketing communication industry are complaining but not stridently over the poor payment attitude of their clients.
Both local and multinational companies who contract the agencies for professional media businesses have in the recent time extended period of payment to these agencies from 30 days to 90 days to 180 days (6 months) and sometimes 10 months.
“While the agencies and the media were believed to have fulfilled their own part of the contractual agreement by executing the contracts, they are now faced with the challenge of getting the clients honour their own part of the bargain by paying the invoices that have over -stayed agreed working grace period of 45 days”, an analyst said recently. This can be described as being against ethical standard.
This is obviously negatively impacting the operations of the agencies, especially when it is considered that the agencies borrow money from banks and other financial institutions as high as 25 per cent interest rate to finance the given contracts from clients.
What these companies in various sectors are doing is to use our capital to finance their marketing businesses instead of going to the banks themselves to borrow money, one of the worried operators told BusinessDay in Lagos.
“Many of us owe salaries, it is threatening our business and this clients’ attitude is gradually forcing some agencies to head southwards”, he said.
Unfortunately, when the clients pay for the job executed after many months, the money goes to finance the interest accrued on the borrowed money, another perturbed practitioner said.
The agencies are not complaining loudly to avoid being labelled ungrateful as clients see jobs given to them as favour instead of professional service to grow the clients business.
Another practitioner who spoke on the issue said some of the ways to obviate the clients’ excesses is to spell out clearly payment duration during the signing of contract document. This way, he believed that client will be legally constrained to pay as at when due.
He also believed that the clients are unfriendly on payment because the industry associations have not taken strong position on the issue. “When the industry takes a strong stand on the issue, the clients will respect us”, he said.
Recently, BusinessDay reported that Nigeria’s marketing agencies have started to cut workers’ salaries to stay afloat, BusinessDay has gathered.
The percentage of the salaries’ cut differs, but according to a source, the average is 25 percent across cadres in the agencies. A particular agency operating in Lagos informed its workers about this development and said it is a measure to sustain the business in the difficult time. Apart from this measure, another company is downsizing.
