Omnicom faces epic cash crunch
March 12, 2009
It appears that Omnicom group inc has decided to treat commercial producers as their banks.
Omnicom is requiring that U.S. commercial producers wait until clients pay its agencies before they pay the producers’ bills. Jim is reporting at B|Net
It’s actually understandable, as there have been reports that clients are paying later and later, causing extreme cash flow problems. However during a normal economy the bank would extend the advertising agency a line of credit to balance out things like this. However due to the economic depression, we are seeing banks not extending .. or in many cases… actually cutting .. existing lines of credit to balance out these times.
Partially due to the banks failure to lend money, the Omnicom is forcing their problems onto the commercial producers. In turn giving the commercial producers a cash flow problem.
This is only going to get worse. Our agency has seen fortune 1000 clients change the terms on us company wide.. from a net 45 to a net 60 …. with no notice…. you can’t sue because you’ll lose the client.. all you can do is complain.
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