Advertising industry payments have become challenging to manage, as expanding media outlets create diverse cash flows between clients, ad agencies and media outlets.
That complexity is driving a partnership between AnchorOps, a company that partners with advertising and media agencies to provide electronic payments, audits, reconciliation and software development and Wex, a provider of corporate payment products. The two companies have launched AnchorOps ePay, which customizes payments for advertising and media buying agencies.
"In the past, a company would spend a million dollars on ads or media and you would do a TV and radio campaign," says David Frogel, president of AnchorOps. "Today, there are thousands of media options. Even with radio, there are now ads for HD radio, satellite radio, Internet radio, radio in elevators, etc."
"Thats complicating billing and is squeezing margins," he adds. "Agencies are getting lower fees and are doing more work."
AnchorOps ePay is designed to reduce paper check payments to media vendors in favor of electronic payments, which allows for faster processing and more visibility into payments details. The product also stores vendor data and payment preferences, and combines reporting and payments information to help with remittance and reconciliation.
AnchorOps manages the technical set up for the ad agencies, and builds a database of media outlets for the agenciesincluding information on local media outlets that may be owned by larger chains. Wex processes and manages the payment transactions.
These services combine to give the ad agency a digital view into payments that are coming, going and due. That can help manage cash flow in an industry where theres often little margin for error in payments timing between client, agency and media outlet.
"If an agency is doing a radio buy, there may be hundreds of invoices for hundreds of radio stations, theres a need to track those, and they have to get reconciled and paid," Frogel says, adding the timing of these payments can pose a challenge for the agency. "The agencies get paid by the clients, and they pay for the media. So if the payments are prepaid, thats great, but often its just in time."
Wex and AnchorOps are also working with Level II and Level III payments data, Frogel says. That means the corporate card transaction messages include more information about the actual payment, which results in a lower interchange rate. Level I payments data includes the transaction amount and the date. Level II data includes the customer code, merchant codes and tax information. Level III data includes invoice numbers and more formal information on the transaction itself, such as item description and quantity.
Frogel did not reveal any ad agencies that are using the new product, which was formally launched near the end of June. There is a "robust pipeline" for the service, he says.
"Business-to-business payments have become complex," says Nancy Atkinson, a senior analyst at Aite Group. "I would expect the [agencies] may very well aggregate multiple invoices for multiple companies that they placed ads for, then combine them into a single payment."
Other companies are also trying to simplify payments for industries with complex cash flow between parties. In healthcare, for example, Simplee manages payments for health coverage, vision, dental care and Health Savings Accounts on behalf of consumers. Wex is also attempting to simplify healthcare claims and payments processing via a partnership with Alegeus.
And Bill.com offers a portal that allows businesses to view incoming and outgoing bill payments, with the ability to change scheduled payments to manage cash flow.
"The degree to which you can get more clarity about what the true exception items that companies need to go after will help those companies close invoices faster," Atkinson says.