The Complexities of Getting Paid
This article was first published by micenet in their March 2022 magazine.
An investigation into whether professional conference organisers’ payment structures need to change – particularly in the context of the pandemic – delves into an under-discussed area touching on a myriad of issues faced by our service-based, pop-up, one-shot-to-get-it-right business.
While there doesn’t appear to be a single, standard model for PCO payment terms and instalments, things seem to have moved on from what is thought to be a more common past practice – where the majority of payment was received post-event.
“As an organisation we don’t believe that we can mandate a business model for our members,” says president of the Professional Conference Organisers Association (PCOA), Barry Neame.
“However, over the years we have continued to articulate and suggest strongly that there are some basic principles that people should use in a business model and clearly some of those are that you need cash flow in your business to keep your business going and to create wealth for yourself.
“That’s what our members are in business for. Not to necessarily just create wealth for our clients but to create wealth for ourselves as professional practitioners, so cash flow for your business is an important consideration.”
Neame, who is also director of Canberra-based PCO Consec, says best practice from the PCOA’s perspective is to have milestone payments throughout an event project which are triggered by work completed and add up to an organiser’s total fee.
Older models of payment for PCOs include those which see a large proportion of fees paid on delivery of an event, which could be months or years in the planning, and per-delegate rates, which give PCOs equity in each event’s attendance outcome. The per-delegate fee has not entirely disappeared, but from the PCOs interviewed for this story, it seems to have lost its position as the primary driver of fee structures.
Although there was significant variance in how interviewed PCOs charged, none relied on payment being a larger lump sum at the end of the project, nor did they believe it was a viable model, even prior to the postponements and cancellations of the pandemic.
“It’s not a good business model to have because you’re always at risk of something happening to the client,” says Julie McGraw, managing director of GEMS Event Management, based in Sydney.
McGraw says she changed her payment model around four years ago from a primarily per-delegate fee – which she received in the same month that each attendee registered – to incorporate a global management fee and a much lower per-delegate rate which covered the cost of servicing each person who attends a conference.
McGraw agrees with Neame that cash flow is essential – something she learned in her early days as a PCO when the company “almost went broke” after government event business came to a practical standstill following the 2000 Sydney Olympics – and says it’s been a challenge during the pandemic.
“We really had to think very hard about what we were going to do to actually maintain a level of cash flow in the business during the pandemic. I’m pretty sure all of us are only still here because of JobKeeper.
“But we started talking to clients about what we could do instead and how we could actually make use of the situation for the benefit of their associations.”
With many associations offering free professional development for members during the pandemic, McGraw worked with those clients to deliver this and modified the structure again to fit the circumstances and ensure the health of her client relationships.
“There was no way I was going to ask them to pay a per-delegate fee when they weren’t actually getting paid a per-delegate fee – that wouldn’t have been in my best interests as a business owner, because I wanted to keep them as clients. I didn’t want them to go, ‘this is all too hard’.
“We didn’t put any penalties on our clients that cancelled, we looked at other ways of earning money for them, we had the time to work on some revenue generating initiatives, particularly for our secretariat clients, that we hadn’t had the time to do before. And the clients really valued that and so they stuck with us, through thick and thin.”
Adelaide PCO Vicky Troptsidis, owner of Eventful Projects, also found other ways of adding value for existing clients – and earning revenue for her business – during the pandemic, even without many events going ahead.
“I just went to my clients and said, ‘If you need any support within your business, in or outside of events, I’m here to provide support’.
“With one particular client I am now working with them on people, culture and leadership within their business and also still continue to help them with their marketing and sponsorship and events.”
She has also been helping clients with crisis management and COVID-safe event plans ahead of events restarting.
Troptsidis, who has always had a payment policy of “no money in, no money out; no money in, no work out”, says things have gotten more complicated during the pandemic with events being cancelled and rescheduled multiple times and venues not charging penalties for rescheduling business.
“I’m very service orientated so I look at that and say, how can I then go to the client and say, ‘Oh the venue’s waived all its penalties, but hang on a minute, now I’ve got a surcharge for extra work’?
“It’s just weighing up how much work is actually getting done; is it disruptive to the relationship that you have with the client, is it worth going through the process of invoicing and upsetting them if it’s a minimal amount?
“I guess every PCO is potentially looking at that now and thinking, by rights, we’re redoing events sometimes three or four times over, technically that’s what we’re doing when we reschedule, it’s not just pick up the phone and move the date and that’s it.”
With variance around how different organisers quote and invoice for business, Troptsidis believes having an industry standard would benefit both PCOs and their clients.
“It would be nice if we could tap into a resource and just see, are we all sort of on the same page or are we far off or is a client taking the mickey?
“I think it provides protection to the client as well. Say a client got a quote and wasn’t really sure if this was a normal quote, they could go to an industry body to have that checked or to say, ‘Look, this is really unusual, I’m working with this PCO but I’m not sure, my gut’s telling me one thing but they’re telling me another – is this standard practice?’
“At the moment if you went to any of our industry associations, they would give you a guide, but they wouldn’t be able to 100 per cent or 90 per cent say this is what everyone’s doing because there’s not a standard.”
Karen Sainsbury, co-founding director of Cornerstone Events, operating out of Sydney, and a PCOA councillor, says the evolution of payment structures is a reflection of good business practices.
“Good practitioners change and evolve, and I think that’s probably relevant in this sense – anyone right now who is following that model from maybe 10, 15 years ago where they charged a per-delegate fee and billed at the end of the project is probably not operating professionally – they’re not reviewing their business, their clients’ business needs, they’re literally just cutting and pasting.”
Sainsbury’s fellow PCOA councillor, Tasmania-based Paula Leishman, managing director of Leishman Associates, charges a project management fee but, like McGraw, it wasn’t always that way. And she knows of those who followed an older payment model and got burned.
“There were many people who worked on a model where they would not get paid until the end of the event. And if the event didn’t go ahead, they wouldn’t get any money. They may have put in two years’ worth of work and that’s heartbreaking.”
Leishman believes the industry has work to do on its value proposition, which feeds into some of the issues PCOs face around payment if the execution of the event is seen as the only value an organiser provides.
“My belief is that there’s not been enough value placed on the importance of the strategy that goes behind delivering a really good conference,” she says.
“Every single conference is like a little mini business.
“We’re like management consultants.”
Neame agrees.
“We can make money for clients with the skillsets and expertise that we’ve got. The challenge is how do we elevate ourselves to that next level. I think we were on quite a good path towards establishing that when COVID smashed us and everybody just wasn’t sure what to do next.”
To minimise issues around completing work which becomes redundant should circumstances necessitate cancellation or changes to an event, PCOs are adapting their planning approaches.
“We’ve been somewhat more specific [with our milestones and project plans] and broken that down into some smaller increments to ensure that there’s a very clear understanding of everyone – our team and our client’s team – as to what we’re doing at any particular time,” says Neame.
“And building in that redundancy and that risk mitigation that, [if] the feeling is with this client [that] they might be getting to this point where they’re not prepared to continue with a live event…we’re going to move it to a virtual or a hybrid activity.”
Leishman says, “It’s more explanation up front, whereas often clients are really keen to get things started.
“We’ve actually put the brakes on and said, ‘Yes, we can do all of that but as part of our risk mitigation, we’re not going to book that in. We’re just going to pencil it in [so] we’re going to have an opportunity that you’re not going to get caught financially’.”
Troptsidis, meanwhile, has been fighting against her natural event manager instincts.
“It’s that thinking ahead and being really proactive and just getting on top of everything, which is a natural trait for an event manager. Now you’re sort of taking a step back and going, ‘hang on, do I really need or want to do this just yet, can it wait?’”