An ever-present issue for PR agencies, Ben Kershaw, Client Services Director at Katch International discusses the problems faced when clients try to escape paying their fees, the lessons learnt in the process and the precautionary measures that should be taken…
People, regardless of their position and company status will often try to take advantage in this industry
Whether you’re a multinational or a boutique agency, the issue of clients trying to escape their financial obligation to you is something we have likely all experienced. In Dubai, this pressing issue is magnified as a result of its fast-paced nature and the ever-changing landscape of company circumstance. Often, chasing payments can consume almost as much time as executing the project the agency was initially recruited for.
When representing a very large client upholding, an agency might not only oversee the client’s presence in a specific country but across other continents, and look after not just their PR, but also their events production and design. This means dealing with suppliers to produce almost all of their collaterals, from business cards to press walls. Suppliers will always require a certain percentage upfront, which can create large cash flow issues when it comes to some of the huge scale events. Sometimes clients follow payment terms, but at times, due to the urgency of the job, suppliers rely on strong business relationships with the agency to proceed without down payment. If, after not being paid a retainer fee, a client’s financial team also refuses to pay suppliers due to lack of a paper trail, this then has potential to completely damage rapport with said suppliers, forcing an agency’s hand to look for new ones to service other deliverables for paid clients until all outstanding payments have been settled.
It’s also important to realise that a previous relationship or friendship with a client will not equate to having the same pleasantries in business; if a personal relationship takes a professional turn, it is easy as an agency to leave yourself vulnerable by easing up on standard protocol and even easier to get caught up in the moment of a great potential campaign. But, when it comes to money, financial teams can be ruthless, often not understanding the customer-facing and sales elements of their business that agencies are trying to support. The personal relationship you have with the client won’t guarantee that they will be able to reciprocate in the same professional manner when it comes to a contracted arrangement. When this occurs, it’s the agency that loses out.
Sadly, these occasions are more frequent than not in recent times. Other than taking legal action – which aside from being against the ethos of many companies is neither time nor cost effective – it then unfortunately translates to swallowing the cost, picking up the pieces and walking away; in contrast to the UK where this matter could be addressed in a small claims court or dealt with through mediation, which would see closure on the case.
People, regardless of their position and company status will often try to take advantage in this industry. Clients are always going to have an ‘off month.’ As an agency, this is something we are all too familiar with. So as a rule, the first service to be cut and the last cheque to be signed is marketing. In a bid to protect us as an agency, Katch’s contracts stipulate both UK and UAE laws. In addition, we have taken steps to allow our clients flexible payment options set out from the beginning in the payment plan.
Extra measures such as adding a clause on intellectual property rights being yours until the contract has been honored are other steps we have initiated. We’ve also made it clear with our suppliers and clients that all third-party agreements must be adhered to or a job will not be delivered.
In this country, reputation is everything and word does spread if certain clients are known to avoid payment. At the end of the day, all we agencies can do is protect ourselves.
Ben Kershaw is the Client Services Director at Katch PR.