As the challenging economy means maintaining cashflow is more important than ever, Clive Reeves, PR director at Ward Lovett Advertising & PR, looks at how PR firms can benefit from credit insurance.
Back in the days when I was operating as a lone PR consultant, doing the job was far more important than running myself as a business.
I took the approach of “do the job well and the money will follow.” Unfortunately, that didn’t always work. I think that may be the approach other, larger PR outfits have been falling foul of.
I have to admit credit control wasn’t high on the list of my priorities. Perhaps I’d work on a big project and make the client aware I was keen to get my hands on the juicy cheque afterwards, but quite often the run-of-the-mill chasing for payment didn’t get done.
Advertising agencies seem far more inclined to insure debts than PR consultants, and that’s understandable with larger amounts at risk and suppliers to pay, even if a client goes bust.
I think PRs should seriously consider insuring debt. Four years ago I joined forces with Ward Lovett, a £10million billing ad agency. It was a financial eye-opener and made me attach far more importance to prudent financial control. Doesn’t sound very PR or glamorous, but it does get the bills paid!
With all of the procedures and safeguards the company has, I now believe credit insurance is the way to go.
At first glance it’s hideously expensive, but in reality, nowhere near as expensive as an unpaid bill.
As far as I’m aware the company has never had to claim, but has on occasion sought the advice of the insurer with a slow payer.
I think even the implied threat of third party debt collection has an effect in getting wayward clients to cough up.
Credit insurance has made sure our company has robust credit control, firstly because it’s good practice and secondly because it’s within the terms and conditions of the credit insurance policy we do. Insurers aren’t stupid.
They carefully assess the credit-worthiness of each client and impose procedures to ensure we’re not going to take financial risks with the amount of credit we allow, or who we allow it to.
They also make sure we work hard to recover any debt before it gets out of hand.
Should you not be able to get credit insurance on a new account, it should ring warning bells immediately.
You should give serious consideration to whether you want to deal with this company, or whether you should be billing them on a pro-forma basis to get your money up-front.
Credit insurance is simple and has given us added confidence to get on with the work without the worry of not getting paid for it.