Nearly half of payments made to creative industry companies were late last year, leaving the industry over a billion pounds out of pocket at any given time, new figures reveal.
MarketInvoice research shows 48% of invoices to creative industries were paid late in 2018, totalling £1.1bn.
A typical invoice worth £38,137 was being settled 13 days beyond payment terms, the data shows, with one in seven companies taking more than 14 days to pay on time.
However, the frequency of late payments was lower last year than in previous years and has fluctuated significantly in recent years. In 2017, 64% of payments were late, compared with 54% in 2016, 66% in 2015 and 55% in 2014.
The creative industries, which provide film, TV and design services as well as advertising and publishing, are typically populated by many smaller companies that are more vulnerable to stoppages in cash flow.
WPP, meanwhile, warned its agencies earlier this month that they needed to improve cash collection from clients after the company’s balance sheet showed £17m worth of bad debt in the UK.
Ad industry insiders have told Campaign that agencies are having to be more vigilant about chasing late payments as high street retailers are having difficulty getting credit insurance amid tough trading conditions.
The terms of an invoice normally dictate a long payment period that can be up to 120 days, leaving agencies with a cash flow gap in the interim.
Caroline Norbury, chief executive of Creative England, said: "We know that lengthy payment delays can cause talented, profitable businesses to fold.
"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 [gross value added] for UK plc."