Consolidation Needs Sales-Credit Teamwork

Consolidation, centralization, hubbing, call it what you will, it’s become a fact of life in the media business these days. Whether fueled by the potential for increased revenues or decreased expenses, the process calls for a bit of finesse in addition to the planning for the combination of resources.

TV stations and other local media businesses typically employ a local sales force. It’s a common sense way to attract and keep local customers. However, realizing those ad dollars now depends upon the involvement of a credit and collections manager who is more likely to be across the country than down the hall.

Of course, the geographic distance between these interrelated functions is seldom a problem in closing a sale thanks to the technology at our disposal today. But it can become an issue in situations where the advertiser doesn’t pay. It’s at times like these that collaboration between the company’s corporate or regional-based credit and collections manager and its market-based ad sales executives can make the difference in whether or not the station will be able to collect the money it’s owed.

Bob Warner, director of corporate credit and collections for LIN Media Group talked about the importance of this collaboration in an article for The Financial Manager, our member magazine.

Warner joined LIN after eight years of credit management in the manufacturing and construction industry. He immediately recognized that the company’s centralized structure for managing credit and collections required removing the inter-departmental distance that can become even more pronounced when there’s an unknown person in the approval chain.

As part of his plan to visit each station to erase some of that detachment, he prioritized his visits based upon collections issues. The first station on his list had a client who had written two nonsufficient funds checks in the past month.

“The sales and credit teams looked decidedly uncomfortable when I first arrived,” Warner recalled. But when he opened the conversation by saying he wanted to discuss how the credit team could help increase the station’s sales, “the entire mood changed.”

Warner was able to demonstrate the value of that collaboration first-hand by accompanying the account executive and collections specialist on a meeting with the customer who was bouncing checks. Meeting the client in person and “on his own turf” helped them to get him to open up about the problems he was facing and to agree on both a repayment plan and future business terms.

Since Warner’s visit, the customer has held up his side of the agreement and even purchased (and paid for) subsequent media buys.

He recounted that story in an article entitled “Lessons from a TV Station Newbie” appearing in the July-August issue of our magazine, which will be available on our website for another week or so. As its title suggests, the article also discusses instances where Warner has been able to apply experiences from his days in the home building industry to support the mutual goal of ad sales and credit departments.

One of those instances involved getting clients to pay sooner. As part of reviewing a media buyer’s credit-worthiness, Warner recommended the stations help to analyze a potential client’s payment history.

As Warner explained, “In my experience, the local team has always been able to provide information that isn’t necessarily captured by D&B or other credit reporting agencies. The local teams have the benefit of seeing potential advertisers every day. They know their clients’ reputations; they know the customers’ standing in the community, and in most cases, they will know if a certain advertiser is on the air with our competitors. This information allows us to make better-informed decisions, lower our risk and increase our comfort level when extending terms.”

By taking advantage of information about a credit applicant that’s typically easier for the local sales team to acquire, in the past two years the LIN stations have been able to lower their DSO (day sales outstanding) by as much as six days overall.

As the saying goes, time is money, and reducing DSO by nearly a week is quite an accomplishment. Not only does it show investors that the business is being paid promptly, it reduces the need to draw on a line of credit to pay current bills.

Bob Warner’s insights are an example of the vast pool of knowledge shared by members of BCCA, the media industry’s credit association. With their help and support, we continue to improve upon industry resources for supporting their collaborative efforts with ad sales teams to add new customers and reduce DSO. Two examples of those resources are EMCAPP, the Electronic Media Credit Application, and BCCA’s expanding BCCA credit report offerings.

Developed specifically by BCCA to meet the needs of media advertisers, advertising agencies, buying services and media providers, EMCAPP brings the media credit application process into the digital age. The secure online credit application streamlines the media credit application process. By providing a single credit application that’s used by all media advertising providers — TV, radio, cable, print, digital and out of home — EMCAPP reduces the time and money spent by advertisers, advertising agencies and media providers alike on the credit application and approval process.

As part of its nationwide implementation, we have worked with TV stations and other local media outlets in three test markets over the past six months. In every case the sales and business/credit teams have given a thumbs-up to the convenience of an online credit application. They tell us that “advertisers like EMCAPP because it’s as easy as a paper application … but more secure.”

Additionally, test market participants, in Springfield, Mass.; Youngstown, Ohio; and Topeka, Kan., report that they like knowing that as soon as an application has been accepted into the EMCAPP database, BCCA Credit Investigators begin the research process. This shortens the time before they can receive a complete and current media-specific credit report for the applicant.

We have also expanded the amount of credit information that is available via BCCA. In addition to providing members with access to BCCA Custom Reports (media-specific) and Commercial Credit Reports (a compilation of D&B, Experian, Lexus Nexus and Edgar Online information) our database now includes two additional reports, D&B Trade+ and Canadian Equifax. More information about EMCAPP and the BCCA credit reports are on BCCA’s website.  

Advances in technology have played a large role in making it possible for media corporations to consolidate their accounting, traffic and billing and other business processes. At MFM and BCCA, we have leveraged these same tools to create and expand our member offerings.

Still, as Bob Warner reminds us, collaboration is essential. This is why we harnessed the collective and collaborative wisdom of the industry’s ad sales and credit and collections experts to create and improve the effectiveness of tools like EMCAPP in much in the same way a station can improve its revenue performance when it fosters collaboration between these two business functions.

Mary M. Collins is president and CEO of the Media Financial Management Association and its BCCA subsidiary. She can be reached at [email protected]. Her column appears in TVNewsCheck every other week. You can read her earlier columns here.