Media agencies shy away from servicing uninsured Harveys

The £12 million Harveys media pitch has fallen into disarray as agencies refuse to work with the furniture retailer until its budget is underwritten.

In June, Harveys instructed the AAR to put its media and creative accounts, held by Rathbone Media and Soul respectively, into play and has seen pitches from a number of top-ten media agencies.

However, some agencies have become concerned that Harveys has not got credit insurance, and are unwilling to take on the risk of an uninsured client.

Credit insurance was introduced as a prerequisite for clients from most large agencies, following the collapse of uninsured dotcom companies, which exposed them to debt.

The credit insurance acts as a guarantee to both the media owners and the agencies that they will get paid for media space that has been booked by advertisers.

Because agencies book media space some weeks in advance of transmission or publication and pay for the space at the end of each calendar month, they are forced to shoulder large overheads that can only be reclaimed once the client is invoiced.

However, if the client is unable to pay the invoice, if for example it encounters financial difficulties, then the credit insurance will cover the outstanding media debt rather than the agency that booked it.

"Harveys can't currently get credit insurance and until it does then none of the big agencies will touch it," one agency chief said.

Harveys did not return calls.