AOL Payment Rules Irk Suppliers, Freelancers

AOL is the latest company to face criticism for extending payment terms to suppliers and vendors, but according to reports, the tech company is ruffling feathers with its freelancers, too.

Reports on Wednesday (May 11) said AOL extended its payment terms to 90 days for suppliers after a takeover of the company by Verizon led executives to tighten the financial belt.

One unnamed source said they received the “Dear AOL Supplier” letter sent by the company, signed by AOL Chief Accounting Officer and Controller Lara Sweet.

“Effective 30 days from the receipt of this letter, your next payment terms with AOL will become 90 days,” the letter reportedly stated. Reports said AOL also plans to change contract terms with suppliers to also extend to 90-day payment periods.

While suppliers and manufacturers will undoubtedly grumble at the news, reports highlighted that another kind of business partner to AOL will also be affected: freelancers.

That means freelance journalists writing for The Huffington Post, owned by AOL, will also have to wait 90 days to receive payment.

“That’s a very long wait to be paid,” one unnamed freelancer told reporters in response to the news. “It’s not like they are a small company with cash flow problems. It strikes me as they are just being mean.”

In a statement, a spokesperson for AOL said the extended payment terms are a direct result of the Verizon takeover.

“This is a leading industry practice that Verizon implemented last year,” the spokesperson said. “As part of Verizon, we are aligning on this policy.”

The spokesperson added that AOL will honor all existing contracts with suppliers and the payment terms stated within them; new contracts, however, will adhere to the 90-day payment term policy.

While extended and late supplier payments have caused policymakers in other markets, especially the U.K., to take action, the U.S. has seen less intervention from the government. But other high-profile payment term extensions have raised alarms among some suppliers in the country.

Late last year, American Apparel was sued by one of its fabric suppliers for allegations of non-payments after the company faced backlash for extending supplier payment terms.