Supplier rebates – how confident are you that your agency is declaring them?

Most brand/agency contracts state that an agency needs to hand over to their client any rebates received from third parties used on their account, whether specific or on a ‘fair share’ basis (e.g. annual volume bonuses). The question is how do you know that you are getting all your rebates back? Our experience tells us that brand teams get short changed more often than they realise. The only way to really know whether you are getting all your rebates back is to do a ‘contract compliance’ or ’financial’ audit. In this article we explore a slightly unusual situation we were faced with recently when doing just that at a large agency.

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‘Big 4 only’ audit clauses outlawed: what’s the impact on your agency contracts?

In April 2014 legislation was approved by the EU Parliament and adopted by the Council of the European Union to make the audit market in the EU more competitive. Key measures are that Public Interest Entities (PIEs) will have to change the audit firms that review their year end accounts at prescribed intervals and the market is to be opened up to firms other than the ‘Big 4’ (PricewaterhouseCoopers, Deloitte, KPMG and Ernst & Young). As a result ‘Big 4 only’ audit clauses in commercial contracts (often loan agreements) that force companies to use one of the Big 4 firms for their year end statutory audit are now “null and void” i.e. completely unenforceable.

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Why we don’t work on a contingent fee basis

Given the fact that we have managed to find money that our clients are owed in 95% of the audit assignments undertaken on their behalf, you may be puzzled to know why we don’t work on a contingent fee basis, and even more so when it isn’t uncommon for us to find that our clients are owed in excess of £100k…

There are many reasons why we have taken this stance. In this article, I explain in a little more depth why we have taken this seemingly uncommercial position.

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There’s more to this contract compliance audit lark than just money…

When done in the right way, contract compliance audits of marketing services agencies deliver far more value to both client and agency than simply identifying accounting errors.

That was the message delivered by Philipp Schuster of adidas Group at the ProcureCon Marketing Conference held in London in June.

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You can play with my train set…but not the engines

Cast your mind back to your toughest ever panel-based job interview? Now make it even tougher and it will pretty similar to the grilling I received a few months ago from the European FD of a global agency network and his UK counterpart. This was before we had even started the audits of their agencies!

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4 sensible questions to ask when working with small or young agencies

During the past year we have had the opportunity to audit some small, independent and relatively young agencies in a number of different countries across Europe and in the USA. This has been a learning experience for both us and our clients. Here’s why: standard brand/agency contracts are often based upon a standard contract available to members from ISBA, the ANA or their equivalents in other countries. That is, on the whole, very positive. Standard contracts, however, tend to be more suited to mid-large sized, established agencies that have the systems and processes in place to comply with all the terms within the contract, particularly the ones related to record keeping.

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You say potato, I say potahto

As the line goes in “Let’s Call The Whole Thing Off” sung by Fred Astaire and Ginger Rogers in their 1937 movie “Shall We Dance”:

“You say “either” and I say “either”

You say “neither” I say “neither”

“Either” “either”, “neither” “neither”

Let’s call the whole thing off

You say “potato,” I say “potahto”

You say “tomato”, I say “tomahto”

Oh, let’s call the whole thing off”

You say “mark-up” and I say “margin”… and does it really matter?

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Adrian Jenkins FCA, Director, Financial Progression Limited.

‘Half the money I spend on advertising is wasted. Trouble is, I don’t know which half.’

Adrian Jenkins knows where it goes.
John Wanamaker, pioneer of modern advertising and marketing techniques, famously hated budgetary black holes. Here at Financial Progression we’re not huge fans of unproductive marketing spend either. Adrian Jenkins and his expert team of finance professionals work with global brands like yours to ensure exemplary budgetary behaviour and contractual compliance from your marketing agencies. Find out more →

What does ‘independent’ really mean when it comes to contract compliance auditors?

As I read through the agency’s feedback on our draft audit report, I was somewhat surprised. Apparently, “We [the agency] provided all necessary documentation during the audit. There was only one exception, the [words deleted].” The reason why they hadn’t complied with this one (as it happens rather important) clause, was they had a group wide policy that they would only disclose this information to the Big 4 audit firms.

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How different are financial practices in agencies around the world?

While accountancy may not qualify as being the oldest profession, it can date its history back to before the Roman times and the ancient civilisation of Babylon. ‘Modern accounting’, i.e. double entry book-keeping, really started in Venice in 1494 when Luca Pacioli published his “Summa de Arithmetica, Geometria, Proportioni et Proportionalita” which contained 27 pages on book-keeping. I’m sure it was as thrilling a read to scholars then as accounting textbooks are now to modern day students of accountancy!

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