Merchant Financial Fitness - A network survey

[sboxster]

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It seems to me that most threads on here are to do with merhcant non-payment issues, which are usually something to do with the ability of the merchant to validate and pay for their marketing in a timely manner (Although I accept that in some cases it is the network that is at fault).

This then caused me to ask a question - do the networks check out the merchant's financial position before accepting them into the network? If this were to be a standard procedure, for example a Dun & Bradstreet assessment were carried out before acceptance, then it may go some way to establishing a higher level of financial "honesty" among merchants than may exist at the moment.

So, out of interest, can we have a show of hands please?? What does YOUR network do to ensure the ability of its merchants to pay their bills on time?? And how do you punish bad payers??

[uksports]

This then caused me to ask a question - do the networks check out the merchant's financial position before accepting them into the network? If this were to be a standard procedure, for example a Dun & Bradstreet assessment were carried out before acceptance, then it may go some way to establishing a higher level of financial "honesty" among merchants than may exist at the moment.

I would imagine that most networks do some sort of checking - the problem with D&B is that unless you want to pay megabucks for the check, it is only done in relation to the last set of accounts filed at companies house which may not be a true reflection of the companies current standing.

Just for information, Sportzwear is debt free and in profit, so we pay our bills!

Just wish our hosts SQL server was working this morning.........

[Jenny]

Hi
We are fortunate in that we are dealing direct with high st blue chip companies on the whole, registered banks who have to subscribe to proper codes of business conduct. We do experience long lead times for payment where the banks' internal processes take time to produce commission reports, or very infrequently where they have changed their processes and and adjusting to a different method of reporting.
Where we do occasionally deal with agencies for deals we do find that we are often chasing for payment, but we do this relentlessly!
Hope this helps
Jenny

[Supercod]

Ask for money up front, you can sort the wheat from the chaff very quickly. The moment you ask for anything over a grand and they say can't do that then don't deal with them.

Also if you have a look at the CJ non-payers for Jan 2004 and any other month for that matter, every single one of them is a blue chip/high street brand/financial institution so I can safely say they would have a good credit rating but it doesn’t stop them paying bills on time.

I am sick to deaf of hearing from multi-million pound companies that they cant even deposit £2/£3k as a float, and I love the we only print cheques once a month excuess, load of lies and I really don't want to start a partnership with people that deceive you from the beginning. You have to ask yourself this, why would I put thousands of pounds of my money up front to promote a merchant that isn’t willing to do the same? But sadly time and time again it’s Affiliates who are paying out in advance to help these companies grow online yet for many paying a bill on time is alien to them.

[sboxster]

I assume from the lack of network replies that I've touched on a nerve with this one?? Now that's a real worry.

[pistol101]

I assume from the lack of network replies that I've touched on a nerve with this one?? Now that's a real worry.

I've just been asleep in the corner!!

We don't credit check the merchants, they just have to have a positive balance with us. If they don't fund they get removed from the network.

The bigger the business the longer the payment process, i can see why it could be a nightmare, it only takes someone high up to have a week off which delays the purchase order, which delays the invoices.... At the end of the day it's the networks problem not the affiliates.

[Shane]

Too right clarke

far too much creative accounting going on,

I shelled out £6k up front the other month just on a maybe so if I can risk £6k on a maybe with no guarantee of repayment if it goes bits up, then I am sure that any reputable uk based business [epecially blue chip types] can do the same at the drop of a hate especially if it's refundable in the event of non fulfilment/cancellation.

If they can't pay £1k up front how much fun are they going to be chasing for £20k or £50k ?

If they don't fund they get removed from the network

nice one pete.. so it should be.. if I am advertising on mirago, espott etc I have to precredit the account so why not as a reputable merchant too !

[sboxster]

If only everyone was as efficient as AF Pete - anyone else from a network care to comment??

[Malcolm Cowley]

Ill have a crack :-)

Would have posted earlier but man its been busy today so didnt have enough time.

Anyway - In an ideal world we would love to have a system like AF but this is big business and most Blue Chips will not work like that.

When you are dealing with Big Blue chips even though they have a lot of cash they also have a lot of red tape and there are plenty of companies who's standard invoicing procedure covers a 60 day period ie Littlewoods for instance.

It may be the case that they dont mind bending this slightly to work with an affiliate network to satisfy the need for speedier payments but sometimes they dont want to and so you have to look at other alternatives - but not before they are live this should be done pre launch so everyone knows whats what.

Now and I know many will agree - especially the higher earners that - I would rather have a program which was going to earn me lots of money get into affiliate marketing as not . If that meant they were not going to pay me for 6 months but I knew I would definately get paid then I would still promote them.

The problem arises when there is no communication i.e you expect to get paid on a certain date and you dont , then all of us are miffed by that.

Basically at buy.at we work within the means of what the retailer can realistically do and if it is outside the expected then affiliates would be informed before promotion so that everyone knows what the deal is ala energy helpline for instance who have a long approval process for their sales to become sales - then its down to communication and trust.

For some of our big retailers we will advance invoice them for projected sales once we are doing good business with them we find the wheels of their accounts departments seem to grease a little better.

Before you have shown someone the true value of working with affiliates an advance of the size I am talking is practically impossible to receive.

I guess the rest of the process is all about chasing the money in which I can assure you is our top priority every month and is why we have never once failed to send out our cheques on time with the correct amount owed for cleared sales that month.

Bascially each retailer is an individual and we treat them as such rather than lumping them all under on banner as then we can add more strength and depth to the offering and choice we can bring to affiliates.

If we had a system like say AF we would not be working with some of the retailers we currenlty have which make us and you guys a lot of cash.

By managing the unique needs payment wise of each retailer we are able to make them 1000's of sales but also manage to pay you guys on time every time.

I guess the proof is in the pudding and there are plenty of people on this board who can back up my statements and you only have to look at our client list to see that Big Blue Chips are also happy with the arrangements we make.

I believe say CJ for instance will ask for a £2k - £3k escrow for a new merchant - this can be gone in days and then you are left to the devices of said merchant. As the payout time scale for affiliates is the next month you are always going to get problems like extended accounts.

We set a more realistic target of the month after the month follwing commission being earned and make sure we have a suitable payment or advance timeline with the merchant beofre going live and up till now this has proved a roaring success.

Hope this helps

ps now you know why I needed a bit of spare time to write this v long post lol

[mediswab]

Originally posted by sboxster
I assume from the lack of network replies that I've touched on a nerve with this one?? Now that's a real worry.

How many of the networks activly take part in this forum?

Are they obliged to do so?

[Malcolm Cowley]

Hi ,

Most if not all of the networks have representatives which use this forum in some form or another.

The best way to reach someone at the networks is to contact them directly though as not all of them view as much as others .

[sboxster]

Malcolm, I appreciate you taking the time to reply, but I still think that you've basically taken a swipe at AF's merchant quality. If Singapore Airlines isn't blue chip, I don't know who is. If AF can get advance payments from the likes of them, perhaps they could offer you some advice

This said, my own view is that blue chips can bully small businesses into accepting whatever payment terms they like, as they know that their custom is so valuable and sought after that most small businesses are desperate to take them. After all, all networks know that its the quality of their merchant clients that attract the high performing affiliates.

If your network is really good, you could probably afford to simply say - these are our terms, you can either meet them, or go elsewhere. Maybe that's why AF have so few blue-chips, but they wouldn't if there weren't softer alternatives for them to bully.

[Malcolm Cowley]

Hi ,

There was definately no swipe intended .

What I am saying simply is that you cannot group all merchants under the same umbrella some can work with advances but want to see proof others never will and some dont mind at all.

Singapore Airlines is in the last category and good on AF for finding them.

We are never " Bullied " into taking a merchants terms - rather we sit down with them and discuss how best to proceed so that affiliates get paid out within the terms of our payment schedule.

We try to focus on profitable accounts and as such have to be a little more flexible than have a one cap fits all payment solution.

I have to stress that the whatever is decided is a mutial decision that both companies are happy with and is always with affiliates needs in mind.

I would rather work in this way as then we all get the benefit of promoting some of the most lucrative programs on the internet CPA wise and that has to be a good thing .

But like I say the proof is in the pudding - if you get paid on time what you are expecting then where is the problem? Would you rather these companies did not have affiliate program?

It is our job to make sure they have programs which you can be sure to get paid from and thats what we do - in an ideal world those pograms would all be underwritten with topped up balances but due to the complexities this cannot be the case for all merchants.

Imagine you were the merchant and I said ok we want £50 000 up front and if its gone mid month we want you to wire us another £50 000 or your program will be supended.

Its not going to happen until there is something to go on and a relationshp formed. Then like we do you can advance invoice certain merchants no problem . The rest you have on tight payment terms and you chase like hell.

No offence to you personally but from your position it looks very straightforward and easy but in reality it takes a lot of hard work and organising and most of all being realistic with what people can comfotably work with.

If we had affiliate payment problems then fine maybe we should take a leaf out of someone elses book but we dont and that is the end game as whatever we do and whatever people think about how we do it we always pay whats owed on time and still manage to maintain a CJ style client list

All in all I think we are doing a good job sboxster and I have never felt bullied by one of our clients before into accepting payment terms which were going to be detramental to our affiliates or our network.

[sboxster]

Hey Malcolm, no offence. I respect you for at least having the courtesy and time to put your point of view across, and in fairness I've never worked with you but given your attitude and obvious pride in your business I'm now considering it.

I'm also heavily biased towards AF as they have been hugely helpful to me personally which has helped us develop a good working relationship.

I think your position is admirable and if you've inferred from my previous post that I was accusing you of being bullied my sincere apologies - it was actually a situation from my own past that I was referring to.

It also remains a fact that only you and AF have replied, which says a lot for you and not much about the others.

[Supercod]

Originally posted by sboxster
It also remains a fact that only you and AF have replied, which says a lot for you and not much about the others.

sboxster, I replied first, I work as Affiliate Services Director at Paid On Results ... and I just made that title up, I am really the tea boy