The PPA Agency Recognition Scheme aims to promote financial security within the publishing industry by providing an indication of the financial health, or creditworthiness, of media planning and buying agencies.
Agencies listed within the scheme have been recommended by PPA members as agencies to which they would consider extending commission and credit facilities.
Inclusion within the scheme is based on detailed analysis and assessment of the financial information regarding an agency based on objective criteria. Inclusion provides an independent endorsement of the agency’s trading record, although members must ultimately rely on their own credit research and must make their own decisions as to whether, and on what terms, to extend commission and credit facilities to individual agencies. Recognition does not automatically entitle the agency to credit or commission.
How does the scheme work?
The PPA requires PPA-recognised agencies to submit their financial accounts each year, along with any further information that may be required. Every PPA-recognised agency signs a PPA Agency Agreement, which states that the agency should pay PPA members promptly in accordance with the agency's own payment terms, whether they be 7, 14 or 30 days. PPA does not state standard payment terms for members.
The PPA Agency Recognition Scheme offers publishers:
- Access to address, telephone numbers and contact details for all recognised agencies
- Access to financial accounts of all recognised agencies
- Regular monitoring of recognised agencies to ensure credit worthiness
- Up-to-date information on payment performance collected from the PPA Credit Management Committee
- Action to combat late payment by recognised agencies
- Non-recognised agency information
- When strictly enforced, the scheme provides a stronger position for publishers in dealing with late-paying agencies.
What benefits do agencies receive from publishers?
In return for supplying financial accounts each year, agencies may receive advantageous commission rates and credit facilities from member publishers, although to what extent these are given is the decision of the individual publisher. The Scheme increases its effectiveness with the more benefits that a recognised agency receives, as the higher the rewards for being recognised, the more likely it is that the agency will comply with all the terms of recognition.
How does an agency become recognised?
The criteria that an agency must meet to become recognised are objective and applications for accreditation are assessed by a committee consisting of representatives from within the credit departments of PPA member companies.
The criteria are as follows:
- A trading record of more than two years
- Annual billings of no less than £200,000 in magazines and newspapers and online.
- Shareholders’ funds (or share capital and reserves) of at least £20,000
- Current assets in excess of current liabilities
- A profit before tax in the most recent financial year
- A client base of at least four companies. If any one client accounts for more than 25% of an agency’s business then credit insurance must be in place. A copy of the policy (including number) must be submitted with the application
- Once recognition is granted, the agency must pay PPA members according to their individual trading terms and conditions. Failure to do so may result in the removal of recognition
- If the applicant agency itself does not meet the above criteria yet is the subsidiary of a company which does, it may still be possible for the agency to gain recognition, provided that the parent company is prepared to supply the appropriate indemnity.
How are agencies monitored?
Once an agency has become recognised, it will continue to be monitored through the PPA Credit Management Committee, which meets monthly. PPA compiles a payment report using information supplied by members which is examined at each meeting and if an agency is not paying to individual members' terms, then relevant action is taken to improve payment performance. This committee is open to all members of PPA.
Furthermore, by regularly reviewing the advertising and marketing press and by maintaining close links with other media trade organisations, PPA is able to keep track of account losses and other developments.
An agency can be de-recognised in two ways: by failing to satisfy the financial criteria for recognition, or by continually failing to pay to publishers' terms. In either case, the agency will be given at least 14 days' notice of the impending de-recognition.