Accounts Receivable is a huge part (and problem) with the affiliate business.
Affiliates are constantly waiting on payments from networks.
Networks are constantly waiting on payments from advertisers.
Advertisers are constantly waiting for their money to clear out of merchant accounts holding periods, and waiting for sales to come in. (This last one is not so much an account receivable but things that can slow down advertisers payments to networks.)
An affiliate network has to have a very smart system to know how much room they give to their advertisers. How much of a bill do you let them run up is a question you should have an exact answer to. This answer should coincide with your ability to float payments to affiliates and should also factor in what happens if a advertiser goes belly up or doesn’t pay you for whatever reason. You don’t want your network to go under because of a single advertiser messing up or going out of business.
As an affiliate you have to consider the same things. You have to be aware that advertisers frequently run up a bill and go out of business. A good reputable network should be paying you anyways, but some won’t if the bill is large enough or they themselves the network will go out of business today. Sometimes the burden goes down to the affiliate, which is unfortunate but true in this industry, I’ve seen it happen time and time again with affiliates not getting paid and networks blaming it on the advertiser.
My question is always regarding how the network handled their deal with the advertisers. In many times, it is not just that the advertiser didn’t pay but that all the warning signs were there that they were never going to pay and the network just neglected that fact and overlooked something that was obvious and inevitable.
One of the Victoria, Canada networks that “NeverPaid” me around $5k for a month of traffic, had every excuse in the book. At the end of the day, I questioned their own business practices. You would think a network supposedly as big as they were would be able to pay even if dealing with alleged issues with their advertiser(s).
The moral of the story is to be on top of your own accounts receivable. And, that’s really exactly what it is, even if you’re an affiliate. Sometimes, it’s just a matter of being a little annoying, other times you have to start pulling out the big guns to come up with a legal approach.