Creatives endure two-week wait to get paid
An analysis of 16,000 invoices has confirmed what creatives have long suspected – that the industry is so lax at paying on time that almost two weeks past the ‘due date’ is the norm.
In fact, a ‘typical’ invoice in the creative industry was being settled a cashflow-constraining 13 days beyond payment terms in 2018, according to the analysis of 15,736 invoices.
And where the sum outstanding was the average that the creative service supplier billed for -- £38,137, the almost two-week wait time indicates the industry to be £1.1bn ‘out of pocket.’
MarketInvoice, which produced the analysis, adds that the delay is on top of the contractually-set payment term which, for tiny suppliers like freelancers, can be prohibitive.
“The terms of an invoice normally dictate a long payment period that can be up to 120 days, leaving businesses with a cash flow gap in the interim,” the firm said.
So, explains MarketInvoice CEO Anil Stocker, “landing a big project in the creative industries can be a breakthrough” -- but one that takes a long time to actually materialise.
“Being hindered by long payment terms and, worse still late payments, can really derail the…[creative industry’s] young businesses,” he said.
Phil Dean, managing director at creative agency Certain agrees: “In our world it’s not a problem doing the work, it’s actually getting paid.”
He added: “As a business that’s growing you inevitably become short of cash because you’ve got to fund that growth and clients aren’t always brilliant payers.”
Dean appears to be being polite. As many as half (48%) of businesses in the creative industries were paid late last year, the analysis shows.
That represents an improvement on 2017 -- when almost two-thirds (64%) of creative industries business were paid late.
But ‘paid late’ can mean very late. For example, one in seven of the end-clients analysed actually took in excess of two weeks beyond the payment terms to action payment.
Large companies emerged as marginally more likely to pay the creative industries later than small companies, with the latter potentially more sympathetic to going without money that is due.
“We know that lengthy payment delays can cause talented, profitable businesses to fold,” said Caroline Norbury, chief executive of Creative England.
“Small, ambitious creative businesses make big upfront investments to deliver major projects for clients but often don’t have the financial reserves to cover long cash flow gaps. That’s a waste of talent and lost GVA for UK plc.”
28th March 2019