4As Cries Foul Over Payment Terms – Ad Agencies Are Not Banks!

In a recent statement, the Association of Accredited Advertising Agents (4As) Malaysia has raised serious concerns over the growing practice of extended and unfair payment terms imposed by some advertisers on advertising agencies, warning that such practices are placing unsustainable financial pressure on the industry and undermining long-term value creation.

Tan Kien Eng, President of 4As Malaysia, said that what was once a standard 30-day payment cycle has increasingly stretched to 90, 120 days or more, effectively forcing agencies to finance their clients’ marketing activities.

“Advertising agencies are not banks,” says KIen. “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.”

He highlighted that the issue is particularly acute in campaign production. Agencies are required to pay third-party vendors such as production houses and talent well in advance, while client payments are delayed. This creates a severe cash flow mismatch and puts agencies under significant financial strain.

“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.

Ultimately, this weakens the quality of work delivered to clients themselves,” he added. 4As Malaysia noted that the problem extends beyond individual agencies and is beginning to affect the entire industry ecosystem.

When some agencies accept such terms, it creates a precedent that drives a race to the bottom, eroding healthy business practices and industry standards.

“This is not just a commercial issue; it is a matter of fairness and responsibility,” said Tan. “Many advertisers have strong governance frameworks and codes of ethics, yet extended payment terms contradict these principles. It raises a simple question: how can fairness be upheld when one party carries the financial burden for months?”

Association of Accredited Advertising Agents Malaysia is urging advertisers to adopt fairer practices and move back to reasonable payment terms, ideally within 30 days.

It also encourages agencies to track their payment cycles closely and have clear, upfront discussions with clients about payment expectations.

Agencies need to stand together to drive change progressively, and 4As Malaysia can help facilitate this move. Advertisers must act responsibly and return to reasonable payment terms.

At the same time, agencies should be more prepared to push back on unfair terms. Industry-wide alignment is critical to ensure a fair and sustainable ecosystem.

At a broader level, 4As Malaysia believes Malaysia can benefit from exploring policy measures that promote fair payment practices, including greater transparency in payment terms among large organisations.

“A healthy agency ecosystem is not a cost, it is a competitive advantage,” Kien emphasised. “Agencies play a critical role in building brands through creativity, innovation, and strategic thinking. But creativity cannot thrive under financial strain. If this continues, advertisers risk weakening the very partners they rely on to build their brands.”