Research from business finance company Market Invoice has shown that around half of all invoices for creative industries were paid late in 2018.
In 2018, an average invoice worth £38,137 was being settled 13 days beyond payment terms leaving the industry with £1.1bn of outstanding payments due at any one time.
Of the assessment of 15,736 invoices between 2012 and 2018, larger companies were more likely (51%) to pay the creative industries later than smaller businesses (41%). One in seven (14%) took more than 14 days beyond agreed terms to pay.
Businesses that make up the creative industry are typically smaller companies that provide services to a range of sectors from TV and film to design and publishing. These smaller firms are often beholden to lengthy payment terms meaning they must wait upwards of 90 days before their invoices are paid.
Phil Dean, founder of creative agency Certain, said: “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. In our world it’s not a problem doing the work, it’s actually getting paid that is the challenge.”
For the research, the creative industry was defined as businesses that support the television and film, computer games, fashion, music, arts, crafts, design, architecture, advertising and publishing sectors.
Anil Stocker, chief executive officer at Market Invoice, said: “Landing a big project in the creative industries can be a breakthrough moment for most. Being hindered by long payment terms and, worse still late payments, can really derail these young businesses. Market Invoice exists to support businesses’ cashflow. This enables companies to gear for growth, take advantage of new opportunities and fundamentally, achieve their ambitions.”
In January, Market Invoice raised £56m, intended to expand UK market presence and launch fintech-bank partnerships. This funding round was led by Barclays and fintech fund Santander InnoVentures with further participation from European venture fund Northzone, an existing investor in the company.