OAREX Payment Study Reveals Easing Late Payments Dwarfed By Surge in Underpayments

OAREX, the provider of fast and flexible funding for digital media companies, today announced the release of its H2 2023 Digital Media and Advertising Payments Report. The report, which reveals data and trends of payments across the digital media and advertising ecosystem, confirmed that late payments may be easing but remain elevated, and underpayments increased 5% from H1 2023 to H2 2023. In addition, only three programmatic debtors never paid late over the past six months, which is an all-time low. 

The key findings of the H2 2023 report include:

• Underpayments spiked to a record-high of 20% of all payments, a 5% increase compared to 15% in H1 2023. They exceeded the previous high of 16% high during COVID-19. This was driven by programmatic partners, who increased by 6% compared to H1 2023, up to 25% of all programmatic payments.
• For the first time since H1 2022, late payments shrunk as a percentage of all payments, falling 2% from 48% to 46%. Although this nominal decrease is positive, overall late payments remain elevated and are only 6% away from the COVID highs.
• The frequency of late/underpayments continued to rise in H2 2023. Payments made more than 15 days late dropped from 12% to 8%, but the average payment delay held steady at 11 days. The increase in underpayments was driven primarily by smaller offsets rather than larger outliers. These factors suggest that both late payments and underpayments are becoming more frequent.
• Manual demand (Direct and Agency) saw the biggest improvements in payment performance. Fifty percent of all manual payments were late (a 5% decrease), and 19% were more than 15 days late (a 9% decrease). Additionally, manual payments were six days late on average (down from 10 days late in H1).
• Only three programmatic debtors (with at least six payments) never paid late over the past six months, a new all-time low.

The full OAREX H2 2023 Payments report can be found here.

The data presented in the report was collected from the record of payments OAREX received from companies across the digital media and advertising ecosystem, including ad networks, exchanges, Supply-Side platforms (SSPs), Demand-Side Platforms (DSPs), media buyers, advertisers, and ad agencies.

OAREX analysts reviewed two key data points, which include: 

• Timing of Payments. How early or late does a debtor pay, relative to their stated net terms under which the invoice should be paid? 
• Amount of Payments. How much did the collected amount vary from the amount billed? This data point considers all types of advertiser offsets or disputes that may arise. 

In response to the data, OAREX EVP Nick Carrabbia commented, “It is positive news that late payments eased for the first time since H1 2022, but payment trends are still very concerning.” He continued, “Late payments remain elevated despite their nominal improvement. While underpayments are at record highs and accelerating at an unprecedented rate, the data supports a narrative that more challenges lie ahead and liquidity constraints show no signs of abating.”

OAREX continues to receive a record number of applications from intermediaries and supply partners across the advertising supply chain. Due to increased market risk, banks and investors have grown more selective, making it difficult for companies to secure liquidity vital to their survival. As credit markets remain tight in response to persistent inflation, companies are turning to OAREX for their flexible, non-dilutive financing solutions and free access to their credit insights to help improve their overall credit management. These tools enable them to scale on their terms by taking back control of their cash flow while also reducing their risk exposure.

In line with the industry-wide push for transparency, OAREX began releasing quarterly payment data in 2018 and shifted the payments study report from quarterly reviews to semi-annual in 2021. The next report will reflect H1 2024 performance and will be published in Q3 2024.