CREATIVE industries are grappling with £1bn in late payments, MarketInvoice has found.
New research from the business finance provider found that 48 per cent of firms in the creative industries admitted that they were paid late in 2018.
Last year, the average invoice worth £13,137 was settled 13 days after the payment terms, meaning that the creative industry as a whole was £1.1bn out of pocket at any given time in 2018.
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MarketInvoice found that larger companies were more likely to pay late than smaller businesses, with 51 per cent of larger companies paying on time, versus 41 per cent of smaller companies.
This can result in a stifling of growth in creative sectors such as TV and film, and design and publishing, MarketInvoice said.
“Landing a big project in the creative industries can be a breakthrough moment for most,” said Anil Stocker, chief executive of MarketInvoice. “Being hindered by long payment terms and, worse still late payments, can really derail these young businesses.
“MarketInvoice exists to support businesses’ cashflow. This enables companies to gear for growth, take advantage of new opportunities and fundamentally, achieve their ambitions.”
The research was the result of a collaboration between MarketInvoice, the Creative Industries Federation, the British Interactive Media Association, investor Creative England, and publisher The Drum, to highlight the cashflow challenges experienced by vulnerable SMEs.
Phil Dean, managing director at 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.”
According to the research, there have been significant fluctuations in the number of invoices being paid late over the past few years. In 2014, 55 per cent of invoices were paid late compared with 66 per cent in 2015, 53 per cent in 2016, and 64 per cent in 2017.
However, the number of number of invoices which were paid more than 14 days after the agreed deadline had reduced overall from 23 per cent in 2014 to 14 per cent in 2018.
“We know that lengthy payment delays can cause talented, profitable businesses to fold,” said Caroline Norbury MBE, 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.
“MarketInvoice provides a valuable short-term finance option to help businesses survive and thrive, in this increasingly important economic sector.”
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