Data from media finance company FastPay has revealed that waits for client invoices has risen to an “all-time high” average of 86 days.
Factored from over 31,000 client invoice payments across 2,392 companies, the findings represent a 20-day hike on 2013, while in addition to today’s average, some 7% of invoices are paid after a whole 120 days.
With these unpaid invoices averaging nearly £25,000, such a delay in earnings could be proving detrimental to the growth of agencies and ad techs – especially smaller, independent groups in the early stages of development.
This pressure is exacerbated by the fact that payment to media owners, especially that of Facebook and Google, who own two-thirds of the digital advertising market, hold clients to strict 30-day payment terms.
“Eight years after the financial crash, banks are still refusing sought after credit as they overlook key indicators of a company’s financial strength,” commented Matt Byrne, FastPay’s UK director.
“For agency and ad tech startups in particular, their early-stage cash flows disqualify them from traditional criteria,” he added.
Painting a picture of how smaller media companies can be affected by delays in payment, Byrne points to the example of a digital marketing agency launching a campaign for Pantene, a subsidiary of P&G which has an invoice payment term of 90 days.
“Whilst the agency will be impacted by the cash squeeze, P&G’s credit-default risk is practically zero, making the investment a safe bet.”
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