Kuala Lumpur, Malaysia – The Association of Accredited Advertising Agents Malaysia (4As Malaysia) has raised concerns over the growing use of extended payment terms imposed by some advertisers on advertising agencies, saying the practice is placing increasing financial pressure on agencies and affecting the wider industry ecosystem.
According to the association, payment cycles that were once typically settled within 30 days have increasingly stretched to 90 or 120 days, with some taking even longer. The group said this effectively forces agencies to finance client campaigns upfront while waiting months for payment.
Tan Kien Eng, president of 4As Malaysia, said agencies are increasingly being expected to absorb operational costs while awaiting delayed payments.
“Advertising agencies are not banks,” said Tan. “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.”
Tan noted that the issue is especially significant in campaign production, where agencies are often required to pay third-party vendors such as production houses and talent ahead of receiving payment from clients. He said this creates cash flow challenges for agencies.
He added that talent-related expenses make up a large proportion of agency operating costs.
“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 said the issue extends beyond individual agencies and could impact industry standards more broadly, as agencies accepting longer payment terms may contribute to wider adoption of such practices across the market.
Tan said the issue should also be viewed from the perspective of fairness and corporate responsibility.
“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?”
The association is urging advertisers to return to more reasonable payment practices, ideally within 30 days, while encouraging agencies to monitor payment cycles closely and discuss payment expectations upfront with clients.
4As Malaysia also said industry-wide cooperation would be necessary to ensure more sustainable business practices across the advertising ecosystem. The association added that Malaysia could explore broader policy measures aimed at promoting fair payment practices and greater transparency among large organisations.
Tan said agencies remain critical partners in helping brands grow through creativity and strategic work.
“A healthy agency ecosystem is not a cost, it is a competitive advantage,” Tan 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.”
