There are at least two schools of thought on whether to run spots when advertisers are past due.
1. Yank the ads so they will know you are serious. Don't run any more ads until they pay. Require pre-payment in the future.
2. If there is available spot inventory, allow the ads to keep running since it is not actually costing you any money, you are increasing your billings, and the advertiser may eventually pay.
What are the best practices for handling past due advertisers?
I really would like to understand as many options as possible to this dilemma. I am not sure there is a one-size-fits-all approach that should be applied to every advertiser or station. I would like to understand the best practices for managing this problem as well as creative (even unconventional) approaches you might have taken to manage this problem.
If you haven't seen Bob Villones' post, I LOVE COLLECTIONS!!!, you might like to check it out. A couple other posts that might be helpful: Collection Practices (if you scroll down, Chris Rolando shares the wording that appears in the contracts his stations use) and a great article by Paul Weyland, Collecting Money in a Rocky Economy. I'll include your post in next week's newsletter (since this weekend is a holiday weekend), and I'm sure you'll get some helpful input from our members. -- Rebecca
Having a hard-and-fast non-negotiable policy for payment sounds like a good idea, but I've never seen it work. Every client is different, and if you have a good relationship, you'll know how to handle each situation. Watch for payment patterns and if, say, someone is 60 days behind but always pays before hitting 90 days, he's probably OK. But I would never let a client run past 90 days-you're not doing him/her any favors if you do. At 45 days a simple visit asking if they got your invoice will usually result in a payment.
That is great advice Mike. Thank you!
If you don't train the customer the customer trains you. I think the client has to know that you're serious about getting your money. Running ads without getting paid sends a bad message.
Let me spin this a bit:
A number of years ago a business in my area started getting behind. To set the stage, this business in a market of $12 rates was spending about $2K per month with me. They had been a customer for about 8 years. The balance grew to over $10,000, then more and more. My competitors started dropping them. I went to see them. There were problems. BIG problem. But there were plans to handle things in the future and get everything settled. By the time we reached $60K in debt, every other radio group had dropped them, newspapers cut them off first month they went late, and no one would talk to them. Right their refinance went through, a $60K plus check showed up, and orders short up to over $10K per month and remained there for a few years until our economy was driven into a wall. Today they are again $2K per month advertisers and have been for all of these years.
Had I cut them off when they reached $10K in debt, I would have lost over $250K in advertising revenue (so far) and who knows how much more in the future.
Wow, that's definitely the exception not the rule.
You're right. There is no one correct answer. You have to use good judgement.
If you don't get your commission taken away after 90-days, then let it ride...the bosses will stop you when they've seen enough red.
Try to get to the root of the problem and make your decision from there. It's a gamble...how big of a risk taker are you? I've had lots of money taken away over the years and it's not fun. Most of the time, nice guys finish last.
In most cases you're better off putting them on hiatus until they can catch up and work out a payment plan with your accounting department. I have a few clients that are CIA.
Sure, you want the billing but if you're that desperate to keep that piece of business, there's a bigger problem with you and your overall billing. Remember, this is your business..treat it as such. Never be that desperate. It's not a good position for anyone to be in.
