The Association of Advertising Producers (ASAP) has written to Nirmala Sitharaman, the minister of finance and corporate affairs, with regards to challenges in mismatch of payment terms between clients and vendors.

The letter stated that large multinational clients demand extended credit terms ranging from 30 to 90 days. The letter added that, while the credit terms are between a month and three months, vendors expect payment between 7-15 days because of the nature of their work, causing an imbalance and financial strain on production companies.

The letter, which was signed by Swadha Kulkarni (honorary president, ASAP) and Cyrus Pagdiwala (honorary general secretary, ASAP), added that when production companies seek the protection offered by the government through SME/MSME status, they are often excluded from corporate vendor lists. 

According to ASAP, the arm twisting by large corporations, forces many production house members to forgo SME/MSME status, despite needing the protections it offers. 

ASAP has called for the government to make the following changes:

• Mandatory SME/MSME classification based on revenue: Rather than being optional, SME/MSME status should be compulsory for companies falling within a specific revenue bracket. This would ensure that small businesses receive the necessary protections when negotiating payment terms with larger corporations.
• A flat 30-day payment clearance for all dues: To address the disparity between 90-day credit terms and immediate payment demands from freelancers and vendors, we propose mandating a flat 30-day payment clearance across all industries. This would alleviate the financial pressure on smaller businesses and help create a more equitable business environment. Our industry’s workforce is primarily composed of freelancers and casual labourers who rely on timely payments to meet daily expenses. Payment delays ripple through the entire supply chain, affecting everyone from production houses to the smallest vendors.

The note added: 
ASAP works closely with the All India Film Employees Confederation (AIFEC) and the Federation of Western India Cine Employees (FWICE), which collectively represent over 15 lakh daily wage earners across India. Delays in payment from large corporations affect the livelihoods of these workers, further emphasising the need for timely payments. We would greatly appreciate the opportunity to meet with your esteemed office to discuss these urgent issues and explore potential solutions. Your insights could play a pivotal role in reshaping policies that foster a more sustainable and equitable business environment for India’s SMEs. We hope you will consider revising the current SME/MSME classification guidelines, making them mandatory based on revenue, alongside implementing a flat 30-day payment clearance for dues.