Small agencies, big impact, but only if we get paid on time

Small agencies deliver some of the UK’s most powerful creative work yet too many are being held back by late payments.

By Catherine Frankpitt

“Small business owners should not have to put their homes on the line.”

Those were Sir Keir Starmer’s words a couple of weeks ago when the Government unveiled its new Small Business Plan.

A sector built on small businesses

In our sector, big agencies grab the headlines, but small agencies dominate and often punch well above their weight.

The Agency by Agency IndieNation report found that whilst only 11.7% of agencies overall were classed as high growth, almost half of these were agencies with three to ten employees.

Overall, of the 25,320 independent marketing, advertising, creative and media agencies mapped, 85% had ten or fewer staff and turnover under £500,000.

The hidden cost of late payments

Too often, small agencies are left running on fumes by late-paying clients.

The government promises new legislation to tackle this, including a maximum of 60-day payment terms, easier finance, and broader support.

This is long overdue for the UK’s 5.5 million small businesses, who together account for 99.8% of all companies and 60% of private sector jobs.

When clients don’t pay, everyone feels it

My public relations agency is a textbook example.

We focus on supporting charities and causes delivering positive social impact - work that’s incredibly fulfilling, but cash flow can be challenging. Don’t get me wrong, I love our clients, but as many as half are now paying late each month - missing our 30-day terms in some cases by several weeks.

Charities may not be as cash-rich as corporates, but commissioning work for an agreed fee with a precise payment date should be a principle everyone strives to meet, and the point is, this problem extends well beyond the charity sector.

We currently run a lean core team of six to keep our overheads (and fees) as low as we can, bringing in additional support when needed. But our team and suppliers still need to be paid on time. I'm not unique as a small agency owner in forgoing my salary occasionally to keep the business running smoothly.

Finance: another uphill battle

Access to finance is another hurdle. The House of Commons Treasury Committee report last year noted small business finance application success rates plummeting from 80% in 2018 to 50% in 2023. The Federation for Small Business puts it at just 45%. I’m going to hazard a guess that figure’s even lower for female-founded public relations agencies.

Unlocking potential through reform

The Agency by Agency report shows that in UK public relations agencies, turnover rises with headcount. We have ambitious goals and strong determination. If we had more confidence in cash flow, we could take greater risks – grow our team, support bigger causes, and deliver even more impact for charities doing vital work.

Small business reforms could change everything, but only if the government turns promises into practice. For agencies like ours, this isn’t politics. It’s survival and it’s the key to unlocking our full potential.