The Association of Accredited Advertising Agents Malaysia (4As Malaysia) has published a statement warning that payment terms stretching up to 120 days or more place agencies under increased financial strain.
"Advertising agencies are not banks," Tan Kien Eng, president of 4As Malaysia, said in a statement shared with Campaign. "Yet, we are increasingly being placed in a position where we are expected to fund campaigns upfront, absorb operational costs, and at the same time wait months to be paid. This is neither fair nor sustainable."
What was once a standard 30-day payment cycle has stretched dramatically. The association says some advertisers are now routinely imposing longer settlement windows to at least 90 days on their agency partners. This requires agencies to pre-finance production costs and operational expenses with no guarantee of timely reimbursement.
Campaign previously reported that 37% of brands pushed payment windows between 90 and 150 days or more at the height of the Covid-19 pandemic. Tan said these practices has since caused negative downstream effects on agency workforces.
"As people-led businesses, up to 70–80% of an agency's cost base is talent. When payments are delayed, it directly affects our ability to pay our people on time, invest in new capabilities, and retain the best talent," he said. "Ultimately, this weakens the quality of work delivered to clients themselves."
In addition to 4As Malaysia's 80+ member agencies, several small, indie shops also operate in the country. Extended or delayed payment terms can disrupt cash flow for 62% of small businesses, according to a 2024 Forbes Finance Council analysis.
The association has previously criticised advertisers for demanding ownership of agency intellectual property submitted during pitches. In 2023, then-CEO Khairudin Rahim called out the General Insurance Association of Malaysia and the Malaysian Takaful Association over IP retention clauses in their request for proposal terms for a consumer education campaign.
The association also urged agencies to track their payment cycles closely and hold firm in payment expectations with clients. Tan added: "A healthy agency ecosystem is not a cost, it is a competitive advantage."
Source: Campaign Asia-Pacific
