No deposit, 60-day payment terms killing events industry

Concert

It’s 7pm and the hall which is set to host an appreciation dinner remains in darkness. Across the building, the event manager joined by several entertainers and crew sit to have their dinner.

The event manager receives a frantic phone call. “Where are you?” shouts the caller, clearly panicking over the no-show.

“Where is my payment?” the event manager coolly replies. And then there is radio silence.

Unfortunately (or fortunately for most clients), such a situation is rare as event management companies tend to give in and organise the event despite non-payment. The harsh reality – the often taken-for-granted industry is suffering and the domino effect will also hurt the entertainment industry.

Event companies today have morphed into creditors for their clients, forking out hundreds of thousands of ringgit in advance only to be paid some 60 or even 90 days after the job is completed. This is not okay as it is not financially sustainable for event management companies trying to please clients with slashed budgets.

Mathematically, event management companies will need to relook their fee and hike it up to calculate the loss of interest should they be required to pay up front for a six to eight-month-long project for which they will be paid two months after the job is completed.

It is also becoming a norm for companies to not pay deposits.

“When asked why, most companies say the payment term is dictated by their finance department,” said an industry veteran.

“But what about our terms? No one seems to care. And if we don’t agree, the client will just go to another agency that would accept the job.

“These terms are killing the industry.”

Even the bigger boys seem to be feeling more than just a pinch these days.

Industry players need a strong voice to educate those engaging such services that entertainers, production crew and even the emcees all have to be paid up front. In full. 100 per cent.

Running events comes with risks. Without securing a deposit or being on a retainer, event companies have to bear all costs and be prepared for possible cancellations and postponements. When that happens, no payment will be made until a new date is set.

While clients demand for pitches, they do not see the need to bind the relationship in a contract with the purchase order (PO) often being the only proper documentation in hand.

But the PO is to fulfill a company’s standard operating procedure and it is silent when it comes to a postponement or cancellation.

There have been situations where errors in the PO were only spotted on the 59th day, thus forcing the event management company to resubmit details and wait another 60 days for payment. That’s about four months of waiting for money that is rightfully theirs.

Some clients fear unscrupulous event management companies and thus come up with strict terms but it still does not justify the late payment.

In this unfair game of events, the client always wins. The client meets its objective and key performance index in getting an event organised to create plenty of advertising. In return, the client pays months after the event, that too after earning interest.

Alas, many within are afraid of voicing out as standing up for their rights would simply mean losing business.

Perhaps, a union is what the industry needs in Malaysia as the world braces for what could be an even more financially challenging 2020.