Factoring Companies Guidebook

This refers to the preparation of advertising and marketing material including the actual insertion of advertising space.

Concerns

Concerns relate to the timing and quality of this type of product and the actual proof of debt. The initial preparation of the advertising and marketing material will undoubtedly need to be authorised by the customer prior to commencement, with proofs signed off before the material is released. There is a potential for the Client to invoice for this work in advance, without prior authorization or for "Stage Payments" to exist. If the proof is signed off there is invariably a deadline for insertion. If the deadline is not met, not only would this result in non-payment, but there could be penalty or "Liquidated Damages" arising.

Marketing could involve long-term campaign work, with invoicing raised at each stage, which may not be payable until completion of the whole campaign. Later invoices could be offset against earlier paid invoices if the campaign is not completed.

Identification

Review the nature of the business, invoices and both Client and Debtor terms and conditions.

Invoices for advertising space tend to be raised in advance of insertion and the only effective check on delivery/performance is a review of the publication or the receipt voucher copies (proof of placement) to support invoices. Review the timing of the invoicing. Some companies bill work-in-progress at the end of each month, or according to cash flow requirements, rather than invoicing on completion of the job. Generally, all the detail relating to this type of work is held in 'job bags'.

Treatment

Proof of debt is difficult to substantiate, therefore this type of debt should be considered on an individual Client merit but is not likely to be considered factorable.