PR firms share their experiences with unpaid dues in the latest PR Parable
13th December 2017
Bit of an irony isn't it? That we have to deal with a reputation breakdown from those very people who sign up with agencies and PR consultants to build and enhance their reputation.
From my own experience of being on the client side, the issue of unpaid dues is common. And here's where I must not mince words and be clear to tell all external agencies and individual consultants, that if you apply the rigours of executing a PR plan to that of submitting invoices on time, follow it up ( politely ) post the due date and keep monitoring the conversations that you have with your client, then perhaps this pitfall can be avoided.
I recall a specific incident, when I faced a very meek request from a senior director of a PR firm, in a very diffident tone she informed me that one of our business groups had not paid them for more than seven months! What took me over by complete surprise was the fact that why didn't the agency folks not speak up about it for so long, what took them seven months to ask for what was well within their rights. So yes, a good mix of conviction, courage and courtesy should work for most.
Thank you to all those who responded to PRmoment India to call and share your experiences in this space. And that's the topic we chose for this issue of the PR Parables.
Here’s what Girish Balachandran, managing partner, On Purpose, had to say:
“Clients treat us the way we treat ourselves:
As the founder of a start-up, I’m learning to value our brand and expertise in a way that allows us to command a two-way dialogue between a client’s procurement team and our own.
We’re treated the way we allow ourselves to be treated. My learning and message to fellow consultancy owners is to have the courage to walk away from an opportunity that’s not a good cultural fit, where culture is also reflected by how payment terms are agreed and implemented. If not, we’re not treating ourselves with respect and there’s a low probability that clients will.
It’s the difference between being a consultant with differentiated expertise or being an order-taker offering a commoditized service.”
Moushumi’s Take: Thank you Girish for setting the tone, I agree that once you start on an equal footing, it stays that way throughout. And yes, terms and conditions are as sacrosanct as are project time-lines and outcomes. Agree on all points and sign on the dotted line only when all is mutually agreed to. And build in your own internal time-lines, checks and escalation levels when things are not hunky dory.
Yasin Hamidani, founder of Media Care Brand Solutions, a PR & digital marketing agency shares her experience on unpaid dues on the client.
“We were hired as a PR & Social Media agency by a firm which own several brands in hospitality, food and fashion section.
From June 2017 till September 2017 we have not been paid and our dues have crossed 5 lakh rupees. We then came to know that over 50 vendors weren’t paid and the company had incurred losses of Rs.50 crore ropes. Till date only promises are given by the owners that our dues will be cleared and auditing is happening but still no update.
Another experience we have is from a well reputed Dubai based food brand. We started off as a social media agency in August 2017 and were paid our 1st retainer and post that no sign of payments as the client doesn’t have money to pay. Since the brand owners are based in Dubai we can’t even personally meet them. All we are doing is dropping mails and trying to call them.
Also an association of PR firms should be formed and every PR agencies request and problems faced by them from the clients should be addressed in a strict manner and make sure the dues of the agencies are cleared.”
Moushumi’s Take: Thank you Yasmin for being bold, better late than never. From what you have shared, it is very clear that this is one of those cases when the client/company goes bankrupt and doesn't have any cash flow to clear dues. And yes you have rightly pointed out the solution as well. Well, better late than never. Yes, breaking the retainer in slabs of advance and balance on completion, is a good model to have just so that one is not left high and dry after all is done and dusted.
And this crisis does present a good opportunity to rally the support of all PR agencies and come up with a standard model of payments, a follow up process and a defined legal recourse outline. The deviations may reduce.
I would also try and find out who are the other aggrieved companies that have not been paid, teaming up with the other victims is a good step. And maybe one nice polite mail to the head or chairman of the company to ask whether the dues are held up due to non performance, a direct question seeking inputs will perhaps make the senior most person aware of the situation and his or her intervention could bring in some clarity with regard to the unpaid dues.”
Rooh Entertainment voices their experience with unpaid Dues by PR client
“I Rutika Malaviya, founder & CEO of Rooh Entertainment would like to bring your attention a crucial issue which has become a regular practice in PR industry. A doctor by profession and a self-proclaimed social figure in the circuit of Gujarat, hired our PR service ( 8th July 2017-2nd September 2017) to promote rallies across India on several social issues and government programmes.
“I would like to caution fellow PR professionals, who agree to work to maintain cordial relations and due to mutual understanding, without any written agreement.”
Throughout the rally, our agency supported the Dr with print, channels and radio interviews, stories coverage updates on a daily basis and media monitoring services. After the campaign was over, the Dr did not pay a single penny on the pretext of work done by a government media cell. We have submitted all the proofs of work we did even with the name of reporters (as the Dr demanded) who covered the event but she still maintains a denial.
All communications with the client are in vain, as it goes back to square one of sending her reports which we have already done. The client herself is not available to speak and is roaming around the world vacationing, and her assistant is refusing any payment. Since we are not paid, we were unable to pay stringers, coverage monitoring agency who were deployed to do a pan India PR campaign.”
Moushumi’s Take: Thank you Rutika Malaviya, founder, CEO & editor in chief of Rooh Entertainment for sharing and parting with great advice. Yes, at all times be cordial and maintain good relations BUT not at the cost of missing out on due diligence by way of a signed agreement, specifying the gives and gets, working on an advance and phased model of payouts. Making sure there are clear call outs to late payments and the penalties for payments past due date.
And for all you entrepreneurs, one man/woman team, PR agencies, make sure you invest in one legal resource, could be outsourced or part of your team. Unfortunate that incidents like these happen and you get all kinds of people to play up and resort to these cheap tactics.
I am also curious as to whether or not you signed on to what you will deliver by way of coverage/visibility, if yes then it is easy to map the ground you have covered. If not then I am afraid this kind of a client/campaign is a bit dicey when it comes to deciding so who did what.
My abiding advice to all communicators, please do not rush into signing up and committing to a long list of what you can do for the client. In this case for example, you were aware that she has a link with national politicians and is doing programs on behalf of the Government Of India, maybe you all missed the fact that there could/would have been an involvement from the government media cell. Clarifying that point right up front would probably not have led to this. “
Moushumi Dutt is a senior corporate communications consultant
January 2018 PR Parable topic: One lesson I could share with my younger PR self. Please share your answers with email@example.com
Disclaimer: PRmoment India is not sharing the names of the organisation that our above contributors have said haven't paid. This is to prevent a further escalation of the issues between them. We applaud our contributors for sharing their experiences and ideas.