Marketing agencies are quietly absorbing a structural cash-flow contradiction: large clients now routinely demand 90 to 120 days to pay their bills, while a growing body of law compels agencies to settle with freelancers in 30 days or face double-damages penalties. A report published on April 13, 2026 by The Kaplan Group, a commercial debt-collection firm based in Pismo Beach, California, maps that gap for the first time in quantitative terms, drawing on invoice data from more than 100,000 freelance engagements and two decades of payment-terms tracking by the industry's own trade associations.

The numbers behind the squeeze

The structural mismatch is not new, but its scale today is striking. According to The Kaplan Group, average payment terms for agency fees rose from 45.7 days to 58.1 days between 2013 and 2019 - a 27 percent increase in six years. That was before the post-pandemic acceleration. A meaningful share of marketers now operate on 90- or 120-day terms for fees, production costs, and research expenditure. In documented cases reviewed for the report, some clients pushed terms beyond 150 days.

The Association of National Advertisers (ANA) has tracked this shift closely. According to its research, finance and procurement leaders at publicly traded companies have explicitly connected extended supplier terms to working capital improvements that analysts reward. In other words, delaying payment to agencies is treated as a treasury lever, not a sign of relationship trouble.

The American Association of Advertising Agencies (4A's) pushed back in its "Ripple Effect of Extending Payment Terms" guidance. According to The Kaplan Group's report citing that document, the 4A's stated that anything beyond 30-day payment terms is "incompatible with the typical agency commercial model." The same guidance flagged client demands that agencies pre-fund media buys and production costs as particularly damaging - they effectively transform agencies into uncompensated lenders to better-capitalised clients.

On the other side of the ledger, late payment has become structural rather than exceptional. According to The Kaplan Group, 58 percent of agency invoices are now paid late. More than half of invoices to publishers and platforms in the digital media ecosystem are also late. Recent reporting cited in the study flags record-high late-payment rates across media and advertising in 2025.

Contractors now carry 30 to 70 percent of agency output

The payment squeeze would matter less if agencies still operated primarily on salaried headcount. They do not. According to The Kaplan Group's analysis of data from Adweek and workforce platforms, contractors now make up 30 to 70 percent of the typical marketing team, depending on the company and discipline. Before 2022, that share was closer to 10 percent.

A 2024 analysis by Worksome found a 40 percent surge in freelance hiring by advertising agencies in a single year as shops sought on-demand specialists and cost flexibility. Among companies that had recently conducted layoffs, 69 percent reported turning to freelancers to keep work moving while permanent staffing remained constrained.

The proportion matters because full-time payroll tends to be protected first when cash is tight. Freelancers and small studios occupy a different position in the payment queue. When a client delays payment to an agency by 90 days, the agency must still pay its salaried employees on schedule. The freelancers who produced much of the underlying work are more likely to wait.

The shift toward contractor-heavy models has been visible in the financial difficulties that have surfaced at independent agencies. Brooklyn-based Madwell shut down in May 2025 after defaulting on more than $4 million in bank loans, with staff reporting inconsistent payroll. Code3, a digital agency, tackled a related problem from a different angle in April 2026by centralising its financial data infrastructure, reporting a 300 percent acceleration in billing workflows - a sign of how much inefficiency had previously accumulated in the invoicing and collections process.

What late payment looks like for freelancers

The invoice-level data in The Kaplan Group's report is precise. According to Remote's State of Freelance Work 2025 survey, 85 percent of freelancers worldwide experience late payment at least some of the time. A more alarming figure: 21 percent are paid late or not paid at all more than half the time.

Bonsai, a platform used by more than 100,000 freelancers, contributed invoice-level analysis covering three years of data. According to that dataset, 29 percent of all freelance invoices are paid at least one day late. The gender gap in the data is notable: female freelancers see late payments on 31 percent of invoices, compared with 24 percent for male freelancers.

The creative industries, where much of the marketing sector's output originates, show even higher rates. Sector-specific research on UK creative industry freelancers cited by The Kaplan Group found that nearly half of all invoices to creative freelancers are paid late, with waits stretching up to 90 days. Larger companies are more likely to pay late than smaller ones - 51 percent versus 41 percent. A separate contractor survey found that roughly 20 percent of contractors' total income is delayed. Of that delayed income, 36 percent is paid 30 or more days late and 26 percent is paid 60 or more days late.

These figures carry compounding consequences for freelancers who work on multiple projects simultaneously. A single delayed payment from a large agency client can force a freelancer to defer rent, skip insurance payments, or draw down savings. Unlike agencies, which can in principle access credit lines while waiting on receivables, most individual contractors have no such buffer.

The most significant development in this space is not economic - it is legal. Legislators in New York have introduced hard deadlines and meaningful penalties that convert a previously informal norm into an enforceable obligation.

New York City's Freelance Isn't Free Act has been in effect since 2017. According to The Kaplan Group's report, it requires written contracts and payment within 30 days for covered freelance work. Non-payment and late payment expose the hiring party to double damages plus attorney's fees. The city's Department of Consumer and Worker Protection five-year enforcement report shows that 2,542 complaints were filed between 2019 and 2023, of which 2,184 specifically involved non-payment or late payment. Freelancers who filed complaints with the city reported recovering a combined $2.9 million in owed compensation.

New York State then passed its own Freelance Isn't Free law, effective August 2024, extending similar protections statewide with the same 30-day payment requirement and equivalent penalty structures. Los Angeles and California have introduced comparable protections, including explicit payment timelines and statutory damages for violations.

The legal asymmetry is now documented in a single data comparison. According to The Kaplan Group, agencies may be waiting 90 to 120 days to receive payment from their largest clients while being legally obligated to pay their freelance contributors within 30 days. The gap - as wide as 90 days in some client relationships - means agencies must either absorb the financing cost themselves, access credit markets, or risk double-damages exposure on their contractor obligations.

Dean Kaplan, CEO of The Kaplan Group, described the dynamic directly: "Agencies have quietly become the banks of the marketing supply chain. They front the cost of the work, wait months for the client to pay, and now they are legally on the hook to pay freelancers faster than many clients pay them."

How the debt actually moves through the chain

The Kaplan Group's report lays out the cash-flow sequence of a typical campaign with unusual clarity. A brand or enterprise client negotiates extended terms - net 90 or net 120 - and delays payment on a major campaign or media buy. The agency incurs costs immediately: strategy, creative, media, and production, using a mix of salaried staff and freelancers. To manage the gap between outgoing costs and delayed client payment, the agency slows payment to vendors and freelancers where it legally can. Freelancers and small studios end up waiting weeks or months to be paid for work that has already shipped and generated results for the client.

At each step in that chain, the entity with the least bargaining power bears the most risk. The brand client uses its size and credit rating to improve its own working capital. The agency carries the receivable and, in some cases, borrows at cost 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.

The trickle-down debt framing in The Kaplan Group's report is deliberate. One decision at the top of the chain - a procurement team extending terms from 60 to 90 days - creates a waterfall of delayed payments through every tier below it. The freelancer at the bottom of that cascade may have no direct relationship with the brand client whose decision started the chain.

Why this matters for the marketing community

For the marketing industry, the implications spread across several dimensions simultaneously. The workforce model has changed faster than the payment infrastructure. As PPC Land has documented in coverage of agency financial data, billing workflows at independent agencies are frequently fragmented, and the gap between work delivered and cash received can run into months. When billing data is unreliable, late payments go undetected longer.

The legal pressure is only going in one direction. The success of New York City's enforcement model - $2.9 million recovered by freelancers through a city complaint process - has become a template that other jurisdictions are replicating. California, Los Angeles, and New York State have already adopted versions of the model. More states are likely to follow. For agencies with contractor relationships spanning multiple states, the compliance surface area is expanding.

The pay transparency gap documented by G-P and published this week points in the same direction: workers in marketing and advertising are increasingly demanding clearer, faster, and more reliable payment practices from the organisations that hire them. Freelancers who cannot reliably predict when they will be paid are, in effect, operating without the information they need to manage their own businesses.

The broader advertising industry is grappling with financial opacity at multiple levels. The advertising fraud case at Near Intelligence, in which circular payment transactions were used to inflate reported revenue by $25 million, illustrates how deeply financial misreporting can embed itself in an ecosystem where invoicing chains are long and accountability is diffuse. The trickle-down debt problem described by The Kaplan Group is less dramatic but structurally similar: it persists precisely because the connection between a brand client's payment decision and a freelancer's bank account is rarely visible to anyone in the chain.

The methodology

The Kaplan Group's report synthesises data from several independent sources. Agency payment terms and practices come from ANA payment terms research covering 2013 to 2019 and 4A's guidance on extended payment terms. Freelance payment timing and non-payment data come 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 data comes from Adweek's reporting, Worksome's 2024 agency hiring figures, and broader marketing workforce surveys. Legal and enforcement context comes from New York City's Freelance Isn't Free Act five-year enforcement report, New York State Department of Labor guidance, and related municipal and state-level frameworks. All figures in the report are based on the most recent publicly available data as of March 2026.

Timeline

Summary

Who: Marketing and advertising agencies, their brand clients, and the freelancers and contractors who deliver an increasing share of campaign work. The Kaplan Group, a commercial debt-collection firm based in Pismo Beach, California, authored the report. Dean Kaplan serves as CEO.

What: A report documenting a structural payment mismatch in the marketing supply chain. Large clients push agency payment terms to 90 to 120 days. New laws in New York City and New York State require agencies to pay freelancers within 30 days, with double-damages penalties for violations. The gap - as wide as 90 days - means agencies must finance the difference. According to the report, 85 percent of freelancers experience late payment, 58 percent of agency invoices are paid late, and contractors now make up 30 to 70 percent of typical marketing team headcount.

When: The Kaplan Group published the report on April 13, 2026. The data covers the period from 2013 through March 2026. New York City's Freelance Isn't Free Act has been in force since 2017. New York State's equivalent law took effect in August 2024.

Where: The payment dynamics described are global in their freelancer components - Remote's survey covers freelancers worldwide - but the legal enforcement frameworks are concentrated in New York City, New York State, and California. The ANA and 4A's data reflects primarily the US market.

Why: The report matters because the marketing industry has quietly restructured around contractor labour over the past four years, but the financial and legal infrastructure governing that labour has not kept pace. The result is a documented debt cascade - client decisions delay agency payments, which delay freelancer payments - that falls hardest on the people with the least bargaining power and no access to credit. New legislation is converting that informal harm into a quantifiable legal liability for agencies.