Average days sales outstanding for client invoices have grown to an all-time high of 86.42 days, an increase of 20 days since 2013, according to new research.
FastPay, which provides working capital to fast-growing digital media companies, has analysed its data bank of client invoices and has found that agencies and other providers must now wait an average of 86 days to be compensated for their work.
FastPay’s data factored in 31,529 client-invoice payments from 2,392 different companies, in the period from January 2013, when the average agency invoice was paid within 66 days, through to August of 2016. In addition to the average of 86 days, 7.01% of invoices are only paid after 120 days.
With the average value of these invoices nearing £25,000, a delay of 86 or 120 days can prevent an independent agency or adtech provider from growing. This exacerbated by the fact that payments to media owners, especially the giants of Facebook and Google who own two thirds of the digital advertising market are required on strict 30 day terms.
Matt Byrne UK Director at FastPay said, “Eight years after the financial crash, banks are still refusing sought after credit as they overlook key indicators of a company’s financial strength. For agency and adtech startups in particular, their early-stage cash flows disqualify them from traditional criteria. For example, take a digital marketing agency that launched a campaign for Pantene. The brand is a subsidiary of P&G, which has invoice payment terms 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. We prioritise this intelligent data over the broad yet ultimately superficial checks made by traditional lenders and can usually advance payments within 48 hours.”
The full whitepaper ‘A Trillion Dollar Riddle’ can be found at the following link: https://gofastpay.com/whitepaper/