Of all the nasty tricks played on freelancers, welching on payments is the worst. You’ve been caught. I’ve been caught. Don’t be caught. Read on…
“The most important thing this agency produces is invoices.”
It was a favourite quip of one of my favourite creative directors. Yep, you read that right. A creative director who knew how crucial invoices are. That’s because, without the client paying the agency, the agency can’t pay the staff.
That’s you and me.
Hence, invoices. Now, if you’re a regular Robbie Rant Reader you’ll know I’ve been in this silly business for a long time. Not much surprises me. But recently, I learned a completely new agency strategy. And it involves invoices.
Clearly, that’s also you and me.
It’s a despicable practice known as Phoenix Activity. It works like this. An agency gets itself into a tricky financial spot. It could be their clients aren’t paying on time. Or they’ve dangerously underestimated supplier costs. Or their owners got greedy and took too much out of the business. Whatever the reason, in the big picture, there’s a little too much red ink.
Then we reach a crossroads.
Management can either work hard to get everything back in the black. Find new clients. Trim fat. Be smart with costs. Take less from the business. You know, behave with honour.
Or they can wind up the business, change their ABN and reopen next door. No, really. They can do that. In reality, winding up an advertising business isn’t difficult. Most agencies are built on 5-10 key client relationships. As long as those clients are happy to switch the ABN on their payments, happy days. Same with the staff who are retained. It’s an ABN change on their paycheck and a nagging feeling they’ve screwed their previous workmates.
For freelance creatives that means invoices are unpaid. For fulltime creatives that means you’re retrenched without being paid your notice period or outstanding annual leave. Phoenix Activity can really burn.
So, how do you spot the Phoenix managers? The lying liars?
Firstly, trust your instincts. If something seems off, it usually is. The two agencies I know who’ve used Phoenix Activity included very senior people who gave me a weird vibe. They bragged about treating unpaid invoices as “free money”. They were a little too friendly. Or a little too loud. Or just a little too odd.
Secondly, keep your head up. If you’re a freelancer, don’t let multiple invoices go unpaid. This is the reddest of red flags. I know someone who had 4-months of outstanding invoices when the Phoenix arrived and was left with nothing. That’s 4-months with zero income.
Thirdly, when someone shows you their true colours, believe them the first time. During my most recent interaction with a Phoenix agency, they asked me to significantly reduce my overdue invoice. An invoice which matched the signed estimate. After the hours were spent and the work was done. Again, alarm bells.
Finally, share what you know with your creative community. Clearly, I’m on a public forum, so I’m being cagey about “Who?”. But I have privately told creatives who might be tempted to work for someone I know is a lying liar. Let’s look out for each other.
While it’s true there’s honour among liars in adland, some acts are just too low. Even for us. So, I’ve promised myself I’ll never, ever write a word of copy for anyone whose used this strategy. It’s just too risky.
And, with a recession looming, the Phoenix might be just warming up.
Rob Morrison is a rarity in advertising – a grey-haired creative. Rob’s experience includes time as a Creative Director at Ogilvy, BWM (now BWM Dentsu), George Patterson Y&R (now VMLY&R), Campaign Palace and Wunderman. He now runs his own consultancy – morrison.collective.
Here are two more opinion pieces from Rob Morrison:
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