We’ve heard it over and over: digital media payments are getting later and later. But how much later? Why? As a digital media factoring firm, we provide liquidity to digital media companies by buying their invoices. OAREX looked at its digital media payment history, and found some very disturbing results.
Digital Media Payments Getting Worse
In an exclusive, Digiday first reported on the report in their article, ‘The money is just not showing up’. Here is an excerpt:
Payment terms are stretching longer and late payments are becoming more prevalent in the digital media industry — trends that were already on the rise even before the coronavirus crisis hit.
Oarex — an invoice factoring firm that works with demand-side platforms, supply-side platforms, agencies and digital media companies — said the mean average payment terms for the invoices it purchased between January and May this year was 59 days. That’s up from 49 days in 2019, 47 days in 2018 and 40 days in the last quarter of 2017. Oarex did not adjust the data depending on whether its client base was more weighted in a particular corner of the sector — such as exchanges versus DSPs — during the period covered.
Not only have terms increased, but overdue payments are becoming par for the course, according to Oarex’s data.
In the last quarter of 2017, most invoices were paid on time. So far in 2020, invoices are paid nine days late, on average. While nine days doesn’t seem too egregious on the face of things, that’s still two business weeks and a substantial increase from the three days average late payment Oarex recorded in 2019.
The factoring company projects that if these trends continue, digital media payment terms could rise to 64 days on average next year, with payments likely to come in around 12 days overdue.
Bring Certainty to Cash Flow
As always, OAREX can bring certainty to your cash flow and help you avoid cash flow gaps that crush growth, by offering you capital on demand. Apply today and get a term sheet in as little as 10 minutes.