TL;DR: Late payments are a perennial problem for the entire media industry ecosystem and have been for decades. The reasons are complex, made worse by a proliferating number of partners, platforms and payment methods. However, automated solutions specializing in the unique needs of the media industry exist, and can seriously help address the challenges, writes Secil Baysal, Senior Vice President of Media for AvidXchange.
According to Insider Intelligence, U.S. digital ad spending alone is expected to increase by nearly 50 percent over the next four years. The research shows that in 2024, digital advertisers will spend an extra $64.69 billion over earlier predictions.
However, despite the growth opportunity at hand, the media industry has long grappled with payment terms stretching longer and payments arriving later which can be expected to continue even during this boom. Furthermore, it’s not uncommon for publishers to now wait months to get paid.
It’s tough to hold out so long for cash, especially with today’s higher costs of doing business and a potentially looming recession. Late payments hinder publishers’ ability to operate and to pay out their own overheads and make it increasingly difficult to forecast for the months ahead.
The current economic environment – ripe with uncertainty and strangulating labor shortages – exacerbates the problem and shines a spotlight on the need for a fix.
To solve the problem of late payments from agencies, media outlets need to better understand the hold-ups. It’s then that a solution becomes apparent— automation tools can cut through manual workflow obstacles and accelerate payments while improving access to vital remittance data, all in a secure environment.
Let’s take a look:
Why are payments notoriously late in the media world? It’s complicated
The media industry is a complex ecosystem with a proliferating number of partners, platforms and payment methods.
Reuters recently reported that despite economic and geopolitical turmoil the global ad business is expected to grow 8.4 percent this year, settling just a bit after experiencing record highs last year. That growth equates to a lot of ad buys.
Brands now have tens of thousands of channels to explore and bigger budgets to spend. The sheer volume of work that this generates creates complexity that understandably holds things up.
There’s also the unique challenge of sequential liability, an unwritten rule that a person or company does not pay money that they owe until they receive money that is owed to them for the same work, project, etc., which often contributes to longer payment terms.
There’s also the back-end to blame
When it comes to invoicing and processing payments for media buys, the Accounts Payable (AP) department, often understaffed thanks to The Great Resignation and ongoing labor shortages, has its hands full.
There’s an astonishing number of invoices and often conflicting performance data to analyze before reconciling and eventually processing payments. Adding to the volume and complexities are slow-moving, error-prone paper checks.
While the industry has evolved rapidly over the years, for instance adopting programmatic, data-driven, and multichannel capabilities to increase targeting and efficiency, its back-office lags behind.
Accounting departments are still dealing with archaic, manual, based-based processes for invoicing and payments. Their teams are struggling to manage a proliferating number of reports that are not integrated.
The same goes for the Accounts Receivable (AR) side. Remittance work is time and labor intensive, as is processing checks after waiting for them to arrive in the mail. Consider that nearly one-third of payments from agencies are still made via check, according to PYMNTS, and it’s easy to see why payment delays are such a problem.
Modernizing payment processes and methods provide relief
There’s good news. Payment technology can automate the work, speeding payments and providing faster, more secure alternatives to paper checks like e-payments.
Automation technology eases complexities by removing paper and securing invoice and payment data in a cloud-based platform so it’s readily available. It provides for better reconciliation with succinct remittance data for both new and historical payments.
The added visibility means media companies are freed from the time-consuming hassle of making follow-up calls for payment status and they can more effectively monitor their cash flow.
Some automated payments solutions specialize in serving the unique needs of the media industry, seamlessly integrating with major media buying and accounting systems, and offering dedicated supplier networks so companies can receive payment when and how they want it.
Speeding payments to prepare for the future
While economic uncertainty and disruptions have companies on their toes and keeping a careful watch on cash flow, the ad business continues to grow.
And as media companies take on the work and reap the benefits of burgeoning ad budgets, they’ll be increasingly motivated to do what they can to get prompt payments, turning to technology for help.
Payment automation promises to create efficiencies that save them time and money, and provide safer, faster alternatives to slow-moving paper checks. With money more quickly in their pockets, publishers are better prepared for whatever the future holds.
Senior Vice President of Media for AvidXchange
Secil Baysal, Senior Vice President of Media for AvidXchange, oversees the management of FastPay, a leading provider of payments automation solutions for the media industry that was acquired by AvidXchange in 2021. He previously served as FastPay’s President and Chief Operating Officer when the company was acquired and was instrumental in taking the company from its earliest stages to a leader in payments automation. Baysal earned an MBA from Harvard Business School.