NEW YORK: Agencies have responded angrily to the continuing moves by major advertisers, including Procter & Gamble and Mondelez, to unilaterally extend their payment terms to as long as 120 days.

Reactions such as "no way", "insane" and "nonsensical" have been voiced on both sides of the Atlantic, often anonymously, as the full impact of the decisions seeps through.

Mondelez, the snack foods giant, has announced it will move to 120 days from July and terms at Anheuser-Busch InBev, the brewer, can stretch to a similar period. Procter & Gamble, the household goods company, is moving from 45 days to 75 days, a span that is also effectively offered by Johnson & Johnson, the personal care business, although the latter operates a system of faster payment in return for discounts.

"I've heard of a couple of instances that agencies have just said no," Bob Liodice, chief executive of the Association of National Advertisers whose members spend over $250bn a year on advertising and marketing, told the Financial Times.

The situation in Europe differs in that an EU directive limits payment terms at 60 days unless both sides agree otherwise, but here too agencies are facing pressures according to the Institute of Practitioners in Advertising (IPA) in London.

"It is surely nonsensical that agencies – many of whom are [small and medium enterprises] – should act as banker to these major corporations merely so that these corporate giants can demonstrate strong balance sheets to their analysts each quarter," said Alex Hunter, the IPA's finance director.

P&G has suggested to agencies they use its AA credit rating to borrow money cheaply to pay their suppliers and staff.

But Nancy Hill, chief executive of the American Association of Advertising Agencies, rejected this approach.

"Clients are asking us to take on risk like an insurance company and take on debt like a bank," she said. "Neither of those are what we were set up to do."

She was also concerned about what would happen to agencies when interest rates rose at some point in the future.

Brian Wieser, advertising analyst at Pivotal Research in Canada, had another take on these developments, suggesting that social media was enabling advertisers to cut out agencies and communicate directly with their customers.

"This is reflective of the constant erosion of the relationship between advertisers and their clients," he said.

Data sourced from Financial Times, Advertising Age; additional content by Warc staff