Marketing and advertising agencies don’t just feel late payments on their own books. When large clients take months to pay, that debt pressure trickles down to the freelancers and contractors who do a growing share of the work.
A new report by The Kaplan Group looks at how extended payment terms for agencies combine with widespread late payments to freelancers and new legal protections, creating a “trickle‑down debt” problem across the entire marketing ecosystem.
Key Takeaways
- Contractors now account for 30% to 70% of marketing teams, up from around 10% before 2022, as agencies lean heavily on freelance talent to stay flexible and specialized.
- 85% of freelancers worldwide report being paid late at least some of the time, and 21% say they are paid late or not at all more than half the time.
- In the creative industries, nearly half of all invoices are paid late, with many freelancers waiting up to 90 days; larger companies are more likely to pay late than small businesses.
How Dependent Are Agencies on Freelance Talent?
Over the past few years, agencies and in‑house marketing teams have rebuilt their operating models around flexible freelance labor. Data from Adweek and workforce platforms show that contractors now make up 30% to 70% of the typical marketing team, depending on the company and discipline. Before 2022, that share was closer to 10%. A 2024 analysis by Worksome found a 40% surge in freelance hiring by advertising agencies in a single year as shops sought on‑demand specialists and cost flexibility.
Separate surveys of marketing leaders show that:
- More than half say they are using more freelancers now than at any point in the past.
- Among companies that had recently conducted layoffs, 69% reported turning to freelancers to keep work moving while permanent staffing remained constrained..
This shift means that a substantial share of agency output is now delivered by people who are not on payroll. When cash gets tight, full‑time payroll tends to be protected first.
How Far Have Clients Pushed Payment Terms for Agencies?
At the top of the chain, large clients are using extended payment terms as a working‑capital strategy. The Association of National Advertisers (ANA) has documented a steady lengthening of agency payment terms:
- Between 2013 and 2019, average payment terms for agency fees rose from 45.7 days to 58.1 days, a 27% increase.
- A meaningful share of marketers now use 90‑day or even 120‑day terms for fees, production, and research.
- Some agencies have reported being asked for terms extending well beyond 120 days, with documented cases reaching 150 days or more.
In the ANA’s own reporting, finance and procurement leaders at publicly traded companies explicitly link extended supplier terms to working capital improvements that please Wall Street. Delaying payments to agencies is treated as a treasury lever, not a relationship breakdown.
The American Association of Advertising Agencies (4A’s) pushed back in its “Ripple Effect of Extending Payment Terms” guidance, stating that anything beyond 30‑day payment terms is “incompatible with the typical agency commercial model.” The 4A’s also flagged client demands that agencies pre‑fund media buys and production as particularly destructive, because they effectively turn agencies into uncompensated lenders to bigger, better‑capitalized clients.
At the same time, payment performance in digital media and advertising has deteriorated. Studies of digital media payments show that more than half of invoices to publishers and platforms are now late, and recent reporting highlights record‑high late‑payment rates across media and advertising in 2025.
What Does Late Payment Look Like for Freelancers?
Further down the chain, late payment to freelancers is becoming the norm.
The State of Freelance Work 2025 report from Remote found that:
- 85% of freelancers experience late payments at least some of the time.
- 21% are paid late, or not paid at all, more than half the time.
Invoice‑level analysis by Bonsai, drawing on data from more than 100,000 freelancers over three years, shows that:
- 29% of all freelance invoices are paid one or more days late.
- Female freelancers see late payments on 31% of invoices, compared with 24% for male freelancers.
Sector‑specific research adds more detail. A study of creative industry freelancers in the UK found that:
- Nearly half of all invoices to creative freelancers are paid late.
- Average invoice amounts can be substantial with waits of up to 90 days for payment.
- Larger companies are more likely to pay late than smaller businesses (51% vs. 41%).
Another contractor survey found that roughly 20% of contractors’ total income is delayed, with 36% reporting some income paid 30+ days late and 26% reporting income paid 60+ days late.
Where Lawmakers See the Problem: The Freelance Isn’t Free Model
Even if the causal chain from client to agency to freelancer is sometimes hard to see in the accounting, regulators have begun to target the bottom of the cascade directly.
New York City’s Freelance Isn’t Free Act, in effect since 2017, requires written contracts and payment within 30 days for covered freelance work. It also allows freelancers to recover double damages plus attorney’s fees for non‑payment and late payment.
The city’s Department of Consumer and Worker Protection five‑year report shows:
- 2,542 complaints filed between 2019 and 2023.
- 2,184 of those complaints specifically involved non‑payment or late payment.
- Freelancers who filed complaints with the city reported recouping a combined $2.9 million in owed compensation.
The model is expanding. New York State passed its own Freelance Isn’t Free law, effective August 2024, with similar 30‑day payment requirements and penalties. Los Angeles and California have also introduced protections for freelancers and small contractors, including explicit timelines for payment and statutory damages for violations.
These laws create a clear tension for agencies. At the top of their revenue stack, they face large clients pushing 60–120‑day terms and routinely paying late. At the bottom, they increasingly face 30‑day legal obligations to pay contractors and risk double‑damage penalties if they do not.
How Does Debt Actually “Trickle Down” the Marketing Supply Chain?
The cash‑flow chain in a typical campaign now looks something like this:
- Brand or enterprise client negotiates extended terms (e.g., net 90 or net 120) and delays payment on a major campaign or media buy.
- Agency incurs costs immediately: strategy, creative, media, and production—often using a mix of salaried staff and freelancers.
- Payroll is rarely late. To manage the gap between outgoing costs and delayed client payment, agencies slow payment to vendors and freelancers where they can.
- Freelancers and small studios end up waiting for weeks or months to be paid for work that may have already shipped and generated results for the client.
At each step, the entity with the least bargaining power and the least access to cheap credit bears the most risk:
- The client uses its bargaining power and credit rating to improve working capital by extending payment cycles.
- The agency carries the receivable and, in some cases, borrows to cover operations while waiting to be paid.
- The freelancer or micro‑vendor, who often lacks both legal support and cheap financing, waits the longest and feels the most day‑to‑day impact.
This is what “trickle‑down debt” means in practical terms: one decision to delay payment at the top creates a chain of delayed payments all the way down.
Late payments in marketing and advertising are not just an agency‑level cash‑flow issue. They form a trickle‑down debt chain that starts with extended client payment terms, passes through agency balance sheets, and ultimately lands on freelancers and small vendors who have the least ability to absorb it.
Agencies that take a more disciplined approach to credit and collections are better positioned to break this chain. In a sector that increasingly runs on freelance talent, paying on time is not just fair, it is a competitive advantage.
Methodology
This study synthesizes:
- Agency payment terms and practices from the Association of National Advertisers (ANA) payment terms research (2013–2019) and 4A’s guidance on extended payment terms.
- Freelance payment timing and non‑payment data from Remote’s State of Freelance Work 2025 survey, Bonsai’s invoice‑level analysis of more than 100,000 invoices, and sector‑specific studies of creative industry freelancers and contractors.
- Workforce composition and freelance reliance from Adweek’s reporting on the creative freelance boom, Worksome’s 2024 agency hiring data, and broader marketing workforce surveys.
- Legal and enforcement context from New York City’s Freelance Isn’t Free Act five‑year enforcement report, New York State Department of Labor guidance on the statewide Freelance Isn’t Free law, and related municipal and state‑level protections.
- Collections and recovery benchmarks from The Kaplan Group’s own research on B2B collections and recovery rates by outsourcing intensity.
All figures are based on the most recent publicly available data as of March 2026. Where surveys or invoice datasets are geographically limited, this is indicated in the text and the findings are used as directional evidence rather than global estimates.
