Dentsu is limiting the time it pays its minority owned media partners in the U.S. in an effort to ease the strain on these businesses.
The holding company stated that it will forego the normal 60-to-120-day payment terms for all minority owned media partners, as those lengthy terms often put undue strain on smaller businesses, affecting cash flow and day-to-day operations, and will limit its payment terms instead to 30 days.
By implementing 30-day payment terms, Dentsu stated it “will provide a more impactful way to engage, support, and expand minority-owned media partners in the media ecosystem, and truly enable economic empowerment.”
The move was inspired by General Motors, which was the first large company to offer updated payment terms earlier this spring. Dentsu said in a statement that many minority owned media partners have voiced that the industry standard payment terms of 60, and up to 120 days, are a challenge to their business operation and cash flow, especially over the last year.
The new terms state that once a correct invoice has been received, Dentsu’s teams will ensure any discrepancies are reconciled and cleared for payment by the 30-day mark.
This move is part of Dentsu’s Economic Empowerment offering, which it launched in May to combat inequities within the investment of media buying, providing opportunities for Dentsu clients to increase spend with Black and diverse owned media companies.
“Updating our payment terms for minority owned business partners will enable them to more easily access capital, create more content, offer more programming opportunities and propel the cycle of growth. Lifting the burden of having to carry production costs is a key enabler to create equity in media,” Jacki Kelley, CEO, Dentsu Americas said in a statement.
“I have witnessed first-hand the struggles many minority owned media owners face in receiving timely payments and have spent my fair share of time working with agency accounting and investment groups to help resolve delayed invoices and push for faster payments. As we push ‘Economic Empowerment,’ it was important to quickly develop a strong response from the start that tackles the urgent need to address the basic barriers our partners deal with in this space,” added Mark Prince, svp, head of economic empowerment, Dentsu, in a statement.
Many of Dentsu’s minority owned media partners weighed in on the decision.
“Dentsu’s newly adopted policy to implement 30-day payment terms is a new chapter in history for minority owned media owners,” Raul Alarcon, Jr., CEO and chairman, Spanish Broadcasting System, said in a statement. “This offering is an unprecedented showing of support and solidarity to minority-owned media, and I feel this is the beginning of a new era of respect, understanding, and cooperation between the advertising community and minority media owners throughout the country.”
Byron Allen, founder and chairman of Allen Media Group added in a statement: “I commend Dentsu for agreeing to pay Black owned media net 30 days. One of the greatest obstacles for African American entrepreneurs is access to capital that is not predatory, and this level of support will help immensely. We are vigorously campaigning for other agencies and clients to do the same.”
The new offering will go into effect on October 1 for Dentsu’s U.S.-based clients, aligned with the new broadcast calendar.