Today, many agencies’ AP departments approve vendor invoices for payment as long as the invoice falls within the approved purchase order amount. That is the only parameter used to process invoices for payment. This is called Bottom Lining. The practice of bottom lining may serve the agency and save them vast amounts of time in the reconciliation process, but it is a huge disservice to the client. At A3 Media, “Bottom Lining” is a bad word, well maybe two words!
Media invoices are generally generated after the run, sometimes as long as 6-8 weeks after the conclusion of the flight or billing period. This practice hinders prompt reconciliation and close out. That is one of the reasons why many agencies bottom line their vendor invoices just so they can move things along. Another reason why agencies may bottom line their invoices is that it saves them considerable time and paperwork in the reconciliation process. When you bottom line invoices you are not checking to make sure that you got what you contracted for such things as impressions, pacing and rotation. These agencies don’t check the details, and as we all know, the devil is in the details.
One of the details that is important to review during the reconciliation process is reviewing the invoices to determine if it is based on estimates or actuals. Does the invoice include the real metrics verified by either the spot log affidavit or confirmed via the vendor’s dashboard? A3 only processes invoices based upon actuals, not estimates and there must be supporting data provided to support the charges on the invoice. It’s important to review the backup data prior to payment processing to ensure that spots were run in the contractual places, that pacing is correct, and rotation is right. In one such case for one of our clients, we confirmed that the cable buy invoice was under contract total, but upon closer inspection we determined that the invoice also included line items for paid programming spots (not allowed per our contract) and non-contracted programs. Both of which resulted in credits to our client. An agency that bottom lines their invoices would not uncover these charges and would in fact incorrectly pass them on to their client.
For digital buys, we rely on the dashboard data provided by our vendors. Initial review of the dashboard might indicate that the total impressions served matches the contracted amount for that period, closer inspection might indicate that impressions were not served according to pacing and/or rotation instructions. For example, we had such a case that the impressions on the invoice matched the impressions on the dashboard and the total dollar amount was within the contract specs. However, further investigations showed that there were several days that no impressions were served. In this case, we ended up getting some added value for our client.
If we bottom lined this invoice, this discrepancy would not have been found and our client would not have benefited from the added value received. When you bottom line your vendor invoices you are not verifying that you got what you contracted for, the media plan that was carefully constructed may not be validated, and credits due to the client are not processed. Bottom lining invoices is a bad idea for your agency and a disservice to your client.
If I had a nickel every time, I have heard that…
Let me explain. After every buy placed here at A3 Media, our traffic and reconciliation department sends out a brief (one sheeter) “Procedure Letter” to each vendor. This procedure letter details the items we will need from the vendor to help us review and then ultimately approve invoices for payment in a timely manner. Receiving this information is important for us, but it’s also important to the vendor as they all want to get paid.
The most important item on this procedure letter is where and how invoices are to be submitted. In addition, each advertising medium has unique requirements specific to the medium. For example: for out of home, we require proof of posting, for TV/Cable we require programming information, radio we need to see dayparts, etc. We remind the vendor, if there is Added Value on our campaign and it does not run, we will take credits. The point here is that all these requirements are listed and then sent to our vendors for signature prior to the start of all our campaigns. I will also add that our team schedule’s introduction calls with all our new vendors to introduce ourselves and go over these details that are listed on this “Procedure Letter.”
It’s now 6 weeks after this correspondence and the start of the campaign (solely with new vendors) when things can go a little sideways. At this point we have received our first invoice and now our team is looking for the information we had requested in our “Procedure Letter” to reconcile the invoice. We need to make sure that what was contracted, was in fact delivered. We need that information to approve invoices for payment as well as serve as supporting documentation to our clients that what they paid for was received. This might sound weird, but we prefer to pay promptly and not necessarily sit on invoices until the last minute. If we have the information that we need to approve payment, then it gets moved to final processing.
Often after we reach out to these new vendors, we get a response of “What Procedure Letter.” This usually sets off a few emails back and forth of some funny responses like “I didn’t sign any Procedure Letter” or my personal favorite is “O yeah, I remember that, but I didn’t read it.” It’s the ones that don’t read the letter, sign it, and send back that we have growing pains with. This letter is to help them as much as it’s helps us and our client. We have had several cases when a vendor would sign the procedure letter and agree to the terms just to get the buy.
We here at A3 Media have had the privilege of collaborating with some incredible people and vendors through the years. We are always adjusting our procedures to ensure that there are no surprises for both parties. We value our partnerships and want to work together to ensure smooth sailing ahead.Reading Time: 3 minutes
If you’re in our industry, you have probably read countless articles and varying reports on reconciliations and media transparency. We talk about it frequently in our office and constantly try to keep up with changes in advertising, including the best ways to track our campaigns and make sure our clients receive everything promised or more. The industry is changing as quickly as our newest and next buy. From what we have seen, it would take multiple programs to check every aspect of what we now monitor daily, if they even exist.
Several years ago, we had purchased some new media software that would help do some of our heavy lifting, starting with the buying team and ending with the reconciliation team. While being trained on this software regarding reconciliations, our trainer seemed to like the “bottom line” feature for reconciliations very much. The purpose of using this was only to count spots. My first thought honestly was that I would be fired if I used that button. It’s only checking spot totals! But what happens when all spots are not created equal?
When our accounting team is questioned about delivery and ask, “did we get exactly what our client paid for or better?” we better have concrete answers and those answers better not be, “yes, we received the same number of spots that were booked.” We hear all kinds of things, but one of my personal favorite responses we received when asking about delivery was, “I don’t know exactly how many impressions you’ll get, but it’s a lot!”
Let me give you a quick example. Let’s say we purchased a spot in the last episode of the Big Bang Theory, which typically ran from 8 – 8:30 p.m., but it did not run during that time. Instead, they shifted the show to 9 p.m. for a larger audience and ran a rerun of Mike and Molly in that slot. Our software would approve the spot slot because it occurred during the time frame window, but the ratings were only 30% that we expected. Now imagine if that happened hundreds of times on a single buy!
So, you might ask, “if you post what’s the problem?” You’re guaranteed 90% delivery. The problem is that all CPMs or CPPs are not the same cost, quality, or value, so if you only post points to points then why are the costs different? Obviously, the networks think there is a different value to their spots, so then why do you proof them like there isn’t any? Our president always equates it to a butcher shop.
They have ground beef, sirloin, and filet mignon. While they are all beef, they are not the same quality or price, so why would we except 5 pounds of ground beef when we paid for five pounds of filet mignon?
At A3 media, we’re encouraged and mandated to spend a significant amount of time vetting new companies to help us find the newest and best tracking features and we have yet to find any one software that we could run an invoice through and would check all the details that we are looking for to clear an invoice.
With large amounts of TV, radio, out of home, digital and social media, we in the accounting team have to come up with some “out of the box” ways to track some of the more non-traditional buys. Yes, this means we roll up our sleeves and manually verify what the software approves, looking for discrepancies. And yes, it does take longer to reconcile our buys when we do not use or cannot use a program to reconcile.
This might sound a little old school but when it comes to verifying our client’s media spend, it is worth it. In some cases, we will hold off final payment to our vendors until every contracted spot is accounted for, makegoods are run, and even missing added value is supplied as promised. All this extra effort is valuable to our clients and important to our company’s mission here at A3 media. We hold every aspect of the campaign with the same importance.
The importance of vetting a new agency should be as important to you and your company as it is to us when we are vetting these new softwares/programs to track your media spends. When asking your media agency about putting a campaign together, you might also want to ask them how they will monitor and track those details after the buy is placed. These back-end details on reconciliations are as important as the planning that goes into your next campaign.