London, 08 April 2015
The PRCA is launching a campaign to call on organisations to pay their agencies within 30 days, and put a stop to the practice of unethical payment terms in the PR industry.
The PRCA is calling on clients to join its 30 Days campaign and sign up to the Government’s Prompt Payment Code, after PRCA research has revealed that a quarter of PR agencies report that clients generally take over 30 days to pay them.
Francis Ingham MPRCA, PRCA Director General, commented: “The practice of lengthy payment terms simply has to stop. Many clients treat payment terms as a way of shoring up their own cash flow. It is unethical to exploit PR agencies in this way, many of which are SMEs.
“I urge companies to sign up to the Prompt Payment Code right away. I also urge the Government to make prompt payment a legal requirement, not merely a voluntary measure.”
A PRCA Leaders Panel has revealed that a quarter (25.4%) of PR agencies report that clients generally take over 30 days to pay them. One PR agency respondent reported that they have had to wait for 120 days to receive a payment.
On the question of what is ethical, 17% of PR agencies argue that it is unethical for clients to take longer than 30 days to pay their agencies; 36% said that it is unethical to pay anything over 60 days.
As part of last month’s Budget announcement, the Government promised to clamp down on late payments by extending the Prompt Payment Code. Matthew Hancock, the Business Minister, announced plans in February to make 30-day payment terms the standard, with 60 days the new maximum limit.
PRCA in-house members that are already signed up to the Prompt Payment Code include BT, Diageo, Direct Line Group, John Lewis Partnership, Marks & Spencer, National Grid, Shell UK, Unilever, Vodafone, and Yahoo, among others.
Sarah Wrixon MPRCA, Founder and Managing Director, Salix and Co, commented: “Too many large organisations think ‘normal’ payment terms of 40 days – which they pay in 60 – are okay. They’re not but many smaller organisations don’t challenge this, or apply interest for late payments, because they’re frightened of losing valuable business. Why should smaller companies like ours essentially provide interest-free loans to much larger organisations? Paying VAT even one day late is breaking the law and incurs an immediate fine. Perhaps it’s time to apply similar principles for late payments in business.”
Ben Schofield MPRCA, Communications Manager, IAM, said: "Every invoice should be paid within 30 days, there is no reason why any company needs any longer to pay for the services they have been provided with. If by accident or design companies are stalling on paying up, they are causing agencies severe hardship and could potentially put them out of business. It is an underhand and highly unethical way to treat a commercial relationship, and it has to end."
The PRCA is calling on the PR industry to sign up to the Prompt Payment Code, and also tweet its support for prompt payment of PR agencies by using the hashtag #30days.
Who we are: Founded in 1969, the PRCA is the largest PR association in Europe, representing 18,000 people in agencies, in-house communications teams, and individuals. The PRCA promotes all aspects of public relations and internal communications work, helping teams and individuals maximise the value they deliver to clients and organisations.
What we do: The Association exists to raise standards in PR and communications, providing members with industry data, facilitating the sharing of communications best practice and creating networking opportunities.
How we do it and make a difference: All PRCA members are bound by a professional charter and codes of conduct, and benefit from exceptional training. The Association also works for the greater benefit of the industry, sharing best practice and lobbying on the industry's behalf e.g. fighting the NLA's digital licence.
Who we represent: The PRCA represents many of the major consultancies in the UK, and currently has more than 350 agency members from around the world, including the majority of the top 150 UK consultancies. We also represent over 150 in-house communications teams from multinationals, UK charities and leading UK public sector organisations.