IOAA urges members to do business with accredited agencies

To eliminate or minimise the risk of payment defaults, Indian Outdoor Advertising Association (IOAA) has circulated a note to its member firms to desist from doing business with agencies that are not already part of Advertising Agencies Association of India (AAAI) or have not been accredited by IOAA. “As discussed on numerous occasions, practically all our payment write-offs come from such agencies because all business credit given to them are same as unsecured loans given by you. There is practically no recourse when payments of these invoices are not done. Many of these agencies are formed by existing staff of agencies and do not have any long term plans or resources. As such, there is considerable risk in doing business with such entities. However, on the other hand, there is considerable business being routed through such agencies by domestic, local brands, which must not also be ignored. In addition, it must also be considered that tomorrow’s large agencies will have to have a small beginning today,” the note states.

The IOAA accredits the agencies as per parameters like paid-up capital, networth, etc. New agencies can apply for provisional accreditation which will get converted into full accreditation at the end of 5 years. Invariably, new agencies are seen to be causing payment problems to the suppliers. IOAA would be able to effectively intervene in the matter of payment defaults where the concerned agency is duly accredited.

IOAA has laid down the Rules governing the accreditation. “For any new Agency, following the Rules will enable it establish itself quickly and smoothly. It will also provide Media Companies with security to offer credit to new Agencies and to help them to grow instead of constantly looking at new and small agencies with suspicion because their earnings would be at stake,” the note states.

IOAA has an updated list of agencies that are fully accredited and those that have provisional accreditation. The details may be obtained from the industry body’s website.

The note states that if indeed there is business to be done with a non-accredited agency, upfront cash payment will eliminate the risk of default.