Industry 'dismayed' by client move to offer bridging loans

Industry bodies have reacted with dismay to news of clients arranging bridging loans for agencies to foot media and production costs.

Bainsfair called client bridging loans 'rapacious behaviour'
Bainsfair called client bridging loans 'rapacious behaviour'

An agency (which asked to remain anonymous) told Campaign earlier this month that it was asked by a client to foot the upfront costs of an ad’s production, with the client offering to arrange a loan if the agency had insufficient cash flow.

The Marketing Agencies Association asked its members about the practice and was told by one that a client wanted to delay payment to 120 days for everything – including media and production costs – and expected the agency to meet interim costs.

Paul Bainsfair, the IPA’s director-general, said: "We’re dismayed to hear that some advertisers are offering their agencies bridging loans.

"The upfront payment is used to get the production under way. To try and use this as a basis for a bridging loan that will be paid by the agency is rapacious behaviour."

Tina Fegent, a marketing consultant and procurement specialist, said she had not heard of such a practice but stressed that, if it was happening, it would likely be driven by a client’s finance, not procurement, department.