Direct Media Pushes Financial Integrity for List IndustryA recent list company bankruptcy and an uncertain economy are the primary reasons Direct Media Inc. released a set of guidelines urging that list owner money must never be commingled with a list managers' operating funds.
Though the issue has been around for years, David W. Florence founder/chairman of Direct Media Inc., Greenwich, CT, called on the industry yesterday to set up a third-party auditing process for accounting practices.
"We're basically not doing anything except going on record to say, here's our pledge to you and it's nothing new. It's what we've been doing anyway, but we'd like to encourage other people to do the same thing," Florence said.
Direct Media was prompted to issue its Pledge of Financial Integrity because of the economic climate and list firm Alan Drey Co.'s August bankruptcy, though Florence said he is unaware of any impropriety.
"Who knows who else is on the verge of dropping out and who will get stiffed as a result?" he said.
Florence added that probably almost every list company that's ever gone under started by holding money back from the list owner with good intentions to pay the telephone bill or make payroll and ended up overwhelmed.
Though Florence said that there are known list companies that do hold list owner revenue, he declined to name any.
While he hopes that list firms will adopt the pledge, he said he was sure that several already followed similar guidelines.
"We don't want to make anyone else look bad or force our will on anyone," he said.
Even so, Florence admitted that the industry as a whole could use some guidance and that mailers could use some protection. He stopped short of recommending legislation but said that perhaps the Direct Marketing Association could set up an auditing process.
The pledge contains 10 guidelines:
· Keeping a separate account for list owner revenue.
· Making timely payments to list owners for non-managed list rentals.
· Paying list owners of files managed in-house within the month funds are received.
· Not holding list owner payment over pending invoice disputes.
· Checking credit of new mailers and not placing orders for those with poor credit.
· Not placing orders for brokerage clients with seriously overdue invoices.
· Helping clients transition to new list firms.
· Keeping up with outstanding credit and collection for former clients until accounts are settled.
· Using good judgment when requesting prepayment or payment guarantees.
· Being committed to competing and cooperating within the list business for the benefit of the mailer.