Solutions for Late Payments by Music Festival Entities to Contractors and Suppliers.

The global music festival sector relies on a plethora of contractors and suppliers to make their events possible. This global supplier sector is estimated to be worth around US$3 billion but with rising costs and other challenges festival organising entities constantly face cash flow issues. What can suppliers do to mitigate late invoice payments too common in the industry.

The ongoing rising costs in most European and North American economies is hitting the music festival sector hard. The costs of running an event have meant that ticket prices have risen, making it more challenging for festival-goers to afford, which impacts ticket sales revenue. This has serious cash flow implications for organisers ultimately having a knock-on effect on suppliers and contractors who increasingly experience late payment of invoices. What solutions are available for suppliers to avoid late payments from festival entities that is fair for everyone concerned.

Common Suppliers and Contractors.
A typical large-scale music festival relies on numerous suppliers that can include production companies, security firms, staging and temporary structure suppliers, freelancers, power suppliers, waste management companies, ticketing platforms and logistics transport operators. Although a festival entity will have a choice of companies for each requirement, suppliers are usually chosen after a tender process based on service and prices quoted. Contracts between organisers and suppliers will specify payment terms which can be different for every supplier depending on what has been negotiated.

Late payment Prevention Tactics.
The payment terms negotiated with each supplier may depend on whether the contractor is a repeat supplier or new to the festival. Where a supplier is working with the festival for the first time, they may insist on issuing a pro-forma invoice where 100% is payable in advance, this is because there is no payment history to assess. Festvial entities may get more favorable terms with a supplier they have worked with previously. It is not unusual for suppliers to insist on a deposit of 25 - 50% when contracts are signed. A contract will specify payment dates and financial penalties if they are late. Other contract clauses can include the option to withdraw service where payment dates are missed. A more professional approach is to conduct a thorough credit check using a reputable agency who can review the festival entity’s accounts and credit rating to assign a risk evaluation. It is never advisable for a supplier to wait until after the festival to submit an invoice for services as the supplier then has no leverage. If there is any variance in work or services being provided, the supplier must ensure that additional costs are approved in writing by the organisers before work commences. Suppliers and contractors should be vigilant during the provision of their services by monitoring delays in deposits, repeated invoice chasing, and external factors like poor ticket sales or sponsor withdrawals. These are potential red flags that may indicate future difficulties in obtaining timely payments.

Overdue Payments and Processes for Recovery.
Suppliers and contractors should have a structured process in place for the recovery of missed payment dates. If the payment is a week late, a friendly reminder and confirmation of the invoice receipt is normal practice. At 3 weeks overdue a formal payment demand and escalation to the festival's finance or festival director can often assist payment. If after a month no payment has been received, the supplier can initiate a formal letter warning of legal proceedings if payment is not made immediately. If payment is still not forthcoming, the supplier can take legal action or use the services of a debt collection agency who will charge a fee for recovery. Aside from payment penalties written into contracts some jurisdictions allow additional late payment charges backed by government legislation (The UK’s Late Payment of Commercial Debts (Interest) Act 1998 for example).

Other Solutions.
Suppliers and contractors facing missed payments from festival entities can refuse to release or install equipment until payment is made, it's one of the most powerful actions they can take as removal of services or equipment can mean delays for organisers. In some instances, suppliers can seek trade credit insurance which protects them against festival insolvency or non-payment of invoices; however, the cost of premiums needs to be balanced with overall risk. For larger festival entities with generous funds, it may be possible to set up an escrow account where funds are deposited and released to suppliers on time if services have been delivered as contracted. Whatever solution suppliers and contractors consider most appropriate, they can reduce exposure to late invoice payment by agreeing strong contracts and staged payment dates from the outset.

For festival organisers planning their next event using a software management platform like Festival Pro gives them all the functionality they need manage every aspect of their event logistics. The guys who are responsible for this software have been in the front line of event management for many years and the features are built from that experience and are performance artists themselves. The Festival Pro platform is easy to use and has comprehensive features with specific modules for managing artists, contractors, venues/stages, vendors, volunteers, sponsors, guestlists, ticketing, site planning, cashless payments and contactless ordering.

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