"We can confirm that while our objective is 120 days, there is a
spectrum of days payable with each of our vendors based on various
factors including geography and scope," the company said in a
statement. "The reason we made this move to 120-days payment terms
is to align closer to the trends of our peers."
Marketers recently seeking longer payment terms include Procter &
Gamble Co., which said last year it would seek to extend
payment terms from 30 to 75 days in new contracts with agencies.
Mondelez International about a year ago confirmed it was
instituting 120-day payment terms. Other companies known to have
sought longer payment terms in recent years include Anheuser-Busch
InBev and Johnson
U.K.-based food trade publication Just-Food.com reported earlier
this week that Mars had begun seeking longer payment terms in the
U.K. The move drew backlash from a U.K. organization representing
small businesses called the Forum of Private Business. Just-Food
quoted the organization's CEO, Phil Orford, saying: "At a time when
our economy is beginning to grow again it is fundamentally unfair
that small businesses are being used as a line of credit for larger
The publication reported that as Mars was doubling its terms
from 60 to 120 days, the company was "couching the extension within
a new scheme that offers suppliers a chance to be paid a reduced
invoice within 10 days."
It is unclear how successful the company has been in extending
terms with its marketing agencies in the U.S. A person at one
agency that works for Mars said the agency was recently approached
about extending terms but the shop was able to keep its current
terms. Omnicom Group's BBDO, New York, which is Mars' lead creative
ad agency, referred calls to Mars.
In its statement to Ad Age, Mars said, "many of our suppliers
have opted for longer payable terms in order to utilize our offered
financing approach which gives them greater financial flexibility."
The company did not elaborate on exactly what that finance approach
was and how it gave suppliers greater flexibility.
In a report published late last year, the Association of
National Advertisers stated that at least four in 10 marketers
lengthened payment terms for at least some marketing services in
the preceding year.
"Client-side marketers need to consider what is fair and how
they would want to be treated," the ANA report said. "If the
payment terms they are suggesting to their suppliers would not be
acceptable to them as suppliers, a re-think might be in order."