Credit Where Due

Dropping the Pressure

There are ways to limit the stressful aspects of the invoice-to-pay process. MFM conference panelists provide some answers. BY DAVID FROGEL

The invoice-to-pay process is fraught with delays, communication challenges and frustration from both suppliers and agencies. Although the reasons for this are sometimes complex, collaborative software and smarter data sharing can go a long way toward creating a near-frictionless experience for agencies and suppliers.

That was one of the messages conveyed at a panel discussion I moderated during Media Finance Focus 2019 in New Orleans this past May, which featured leaders from both media and agency companies.

“Both sides, vendors and agencies can benefit from compressing the [payment] cycle,” commented Ed Mockus, director of order to cash at Discovery Inc. Mockus and another panelist, Frank Connolly, the CFO of the media seller Viamedia, noted that paper and PDF invoices are the standard, and usage of electronic data interchange (EDI) is still nascent.

“We’re still getting paper invoices in the mail,” said Patrick Kennedy, CFO of the political shop AL Media. “For me, speed and efficiency are critical.” He raised an issue that is important for political agencies: receiving refunds from suppliers quickly. “The goal is not to get a refund; the goal is to repurpose that money for our clients before key election dates.”

Breck Templeton, the CFO of the agency 9thWonder, pointed to some other pain points: missing and incorrect invoices, the agency’s need to reconcile media invoices and the cost of issuing checks to suppliers that don’t accept electronic payments.

Most agree that solutions for the invoiceto-pay portion of the media lifecycle need to concentrate on three key areas: ■ Improving and centralizing communication about invoicing and payment issues; ■ Reducing labor and processing costs; ■ Expediting payments.

Software isn’t a panacea for all that ails the process, but it can go a long way toward improving visibility into issues and reducing unnecessary emails and phone calls.

Whether using a software platform, email or another process, suppliers should have access to the agency invoice status. Invoices that are automatically scanned for issues and fixed before sending will also preempt delays.

In an ideal world, agencies should au-

tomate the distribution of invoice status reports to suppliers using media-buying software and conventional technologies. Suppliers will make life simpler for themselves and their clients if they deliver invoices in EDI format. Generally, PDF and paper-based invoices need to be digitized by agency staff members or a third-party provider. This takes time, causes delays and costs the agency money.

Suppliers often believe that sending multiple copies of an invoice increases the likelihood of getting paid, but it can result in more work and confusion for the agency. When a duplicate PDF or paper invoice arrives at an agency, staff members may digitize it once again, only to discover that it’s a duplicate of what they’ve already recorded.

Invoices that are missing critical pieces of data, such as order/estimate number and flight dates, also cause delays and sometimes end up in invoice purgatory. It seems obvious that sending an invoice quickly and to the right destination will result in faster payment, but agencies are constantly tracking down missing invoices.

Agency policies can compound delays.

Advertisers often have payment terms that can exceed 120 days. While agencies have tried to resist, it’s hard not to capitulate, given the highly competitive marketplace. Since most agencies won’t assume the liability of paying invoices before receiving payment, the problem then shifts to suppliers. Here, there are only three options: reject the advertising; accept the advertising and late payment; or use a third party to get paid on a fixed schedule.

Some media companies use factoring companies, which advance funds and charge either interest or a flat fee for the accelerated receivables. Most factors leverage receivables as collateral, although I know of at least one firm that will advance payment to suppliers without securing the receivables.

Despite the payment-policy push and pull, both agencies and suppliers seem motivated to improve the invoice-to-pay lifecycle. The use of collaborative platforms, better data sharing and more straightforward processes should speed up payments and eliminate much of the unnecessary work.

“The goal is not to get a refund; the goal is to repurpose that money for our clients before key election dates.”

— PATRICK KENNEDY, AL MEDIA

David Frogel is chief strategy officer of FastPay, a media-focused fintech company. He can be reached at david.frogel@gofastpay.com.