Agency’s Policy on Billing and Payment
- GENERAL UNDERSTANDING related to the Experience NAM Youth Delivers – NAM will provide 1 hour of free phone college marketing consultation as well as a general pitch proposal related to phone discussion.
- Beyond the consultation and pitch proposal, any additional requested consultation or work related to proposal generation will be billed at $225 per hour – see attached grid for planning rates.
- NAM offers retainer fees for project work as offset to total campaign billing.
- Alternately, ALL consulting fees charged will be deducted when a final contract has been established.
- Agency’s policy for payment terms requires that for all third-party expenses, the clients funds must be in our accounts in time for payment to be made to third party vendors. For clients that have normal payment terms that will not achieve this goal for third party expenses, billing should be accelerated such that funds are still available when payments to suppliers are due.
- For agency fees, Agency’s policy is that all annual fees, in the form of retainer or fixed amounts are to be billed at the beginning of the month of service, in advance of service being rendered so that payment is received at the end of the month. Under normal payment terms, this provides for appropriate alignment of client’s cash against expenses incurred by the agency. For project work, payment terms must be 30 days.
- Services can only be provided against cash payment (i.e. settlement in cash). Shares or other payment in kind, or other forms of settlement are not allowed.
- Where allowed by law, AGENCY’s group companies must ensure that client contracts include the ability to charge interest to clients on overdue accounts.
- No discount for early payment can be made to the client beyond what AGENCY has achieved with third parties or the actual cost saved by early payment, based on the prevailing rate of interest earned in the relevant market. Early payment discounts earned on third party costs may only be passed to the client providing there is no outstanding indebtedness with the client’s accounts.
Why AGENCY’s Companies Can Not Accept Extended Payment Terms
Clients that request extended payment terms do so with the assumption that the cash flow burden will be passed along to our own subcontractors. While this may work in some industries, such as manufacturing, it is a flawed assumption in the service business. Please consider the following points to educate your client if they are requesting extended payment terms, beyond what is acceptable by AGENCY’s policy.
1. Over 75% of our cost base is tied to the compensation paid to our employees. Payments to staff for their salaries and payment for related expenses, such as benefits and government taxes, can not be extended.
2. The largest portion of our remaining operating expenses is in the form of long term lease commitments such as establishment costs and business equipment.
3. Payment for third-party expenses on behalf of client such as media and production follows industry practice and must be paid within normal terms.
Important Note About Agency’s Global Clients
AGENCY’s offices do work for our global clients. This means that a unilateral agreement made by one AGENCY’s office can have a knock-on effect across the entire company. If you are requested by a global client to alter contract terms beyond those established by our policies, you must not agree to a change without first getting approval from (Agency Officer).