Working with agencies: rates, terms, and getting paid downstream

An agency producer emails on a Tuesday. They need roughly 40 hours across three weeks, starting Monday, and they want a number by end of day.

No discovery call, no proposal, no six-week courtship. That is the appeal of agency work, and it is real. The part that catches people arrives eleven weeks later, when you ask where the money is and someone says, pleasantly, that they are still waiting on the client.

One engagement runs through this post: £4,000 of production work for a digital marketing agency whose end client is a retailer. The numbers are invented for the arithmetic.

Agencies buy something different from what direct clients buy

A direct client is buying a result and does not much care how it happens. An agency is buying capacity that will not embarrass them in front of someone else.

That changes what your pitch has to prove. Not creativity. Three things:

You will not go dark. The producer's actual fear is a missed deadline they have to explain upward. Reply speed during the pitch is being measured, and you should assume it is.

You will not appear in front of their client. Unless invited. Agencies have lost accounts this way, and a freelancer who emails the end client directly is never hired again.

You can absorb a spike. The reason they need you is that three projects landed in the same fortnight. Availability stated in days, not vibes, is worth more here than a portfolio.

Say those three things in four lines and you have out-pitched most of the roster.

The rate is lower, and the effective rate can still be higher

Agencies pay less per hour than the same work sold direct. That is the trade: they carry the account, the pitching, the client management, and the risk that the retailer changes their mind twice.

The number that decides whether it is worth it is not the rate. It is the rate after acquisition cost.

Take the illustration. Selling £4,000 direct might take six hours of unpaid effort: calls, a proposal, revisions, a negotiation. On £4,000 across 40 billable hours at £100 an hour, that is 46 hours consumed and £87 an hour effective.

The agency version pays £70 an hour, so £2,800 for the same 40 hours. But the second engagement from that agency takes a fifteen-minute call to win, and the fifth takes an email. Across five projects the acquisition cost approaches zero, and £70 stays £70 while the direct number keeps paying a sales tax on every deal.

That is the honest case for agency work, and it only holds if two conditions are true: the work repeats, and you get paid within a sane number of days. The second condition is the whole rest of this post.

Work your own version of that comparison with the effective hourly rate calculator, and count the pitching hours as project hours. Almost nobody does, which is why the agency rate looks worse on paper than it is in practice.

Your payment terms are set by a contract you will never read

You have a contract with the agency. The agency has a separate contract with the retailer. You have no visibility of the second one, no standing under it, and no ability to chase anyone in it. But your money physically arrives through it.

If the retailer's accounts payable runs a monthly payment file and the agency invoices on the 5th of the following month, your work in early October gets invoiced by the agency in November and paid by the retailer in December, at best. The agency then pays you out of funds it already holds, or it does not.

The clause that decides which is a pay-when-paid or pay-if-paid provision: your invoice becomes due only when, or only if, the agency is paid by its client. Sometimes it is a clear sentence. More often it appears as "payment terms: 30 days from receipt of client funds," which reads like a 30-day term and is not one, because the clock has no start date you can predict.

Is pay-when-paid actually enforceable? Mostly, yes

This is where a lot of freelance advice overstates the case, so it is worth being exact. I am not a lawyer and none of this is legal advice; the useful thing here is knowing what to look up.

In the UK there is a statutory prohibition, and it is narrow. Section 113 of the Housing Grants, Construction and Regeneration Act 1996 provides that "a provision making payment under a construction contract conditional on the payer receiving payment from a third person is ineffective, unless that third person... is insolvent." Conditional payment is void by statute, with insolvency as the only carve-out.

Note the two words doing the work: construction contract. The Act's scope is set by section 104, which does reach professional services, including "architectural, design or surveying work" and "advice on building, engineering, interior or exterior decoration or on the laying-out of landscape" in relation to construction operations. So a designer working on a building project can be inside the protection. The same designer producing a campaign for a marketing agency is not.

Outside construction, no equivalent UK prohibition applies to a pay-when-paid clause you agreed to. Parliament banned these terms in one industry, after that industry demonstrated at length what happens when subcontractors finance main contractors. It did not ban them generally. Treat section 113 as evidence that the clause is understood to be harmful, not as protection you can rely on.

The EU position is different in shape. Directive 2011/7/EU sets a default B2B payment period of 30 calendar days from receipt of the invoice, caps a longer agreed period at 60 days "unless otherwise expressly agreed in the contract and provided it is not grossly unfair to the creditor," and lets a grossly unfair term be set aside. A term that makes payment conditional on a third party specifies no period at all, which sits awkwardly against a rule built entirely around periods. Whether a given clause survives is for a court. The practical answer is not to sign it.

What you do have is the contract you did sign

Whatever the agency's client does, your invoice is an ordinary commercial debt owed by the agency, and the statutory remedies attach to that relationship unless you contracted out of them.

In the UK, statutory interest under the Late Payment of Commercial Debts (Interest) Act 1998 is Bank of England base rate plus 8%. With Bank Rate at 3.75%, that is 11.75% for 1 July to 31 December 2026, fixed for the half-year. On top sits a fixed sum per late invoice of £40, £70 or £100 by debt size. In the EU, interest runs automatically at the ECB reference rate plus at least eight percentage points, which is 10.40% from 1 July 2026 against the ECB main refinancing rate of 2.40%, plus at least €40 of fixed recovery compensation, and Member States may set more.

"Our client hasn't paid us" is a business problem. It is not a defense to your invoice, unless you agreed in writing that it would be. Which is the entire reason the clause exists.

The rest of the collection sequence, from what goes in the contract through to the reminder cadence, is in the guide to getting paid on time.

Five questions to ask before Monday

Send this before you confirm availability, not after. A good agency answers it in five minutes; how a bad one answers tells you plenty.

Before I block the dates, five quick admin questions so nothing stalls at invoicing: >1. What are your standard freelance payment terms in days, and do they run from invoice date or from the end of the month in which I invoice?2. Is payment to me conditional in any way on your client paying you?3. Do you need a PO before I start, and what number should appear on the invoice?4. Which address should invoices go to, and is that a person or an accounts inbox?5. If the end client cancels mid-project, what is paid for work already done?

Annotating the ones that matter:

Question 1 exists because "30 days" and "30 days end of month following" are different by up to four weeks, and the second is common in agency accounting.

Question 2 is the whole post. Ask it in writing so the answer is in writing.

Question 3 prevents the most boring failure in agency work: a correct invoice that sits unpaid for a month because it lacks a purchase order number the finance system requires.

Question 4 matters because an invoice emailed to the producer who hired you is an invoice sitting in a creative person's inbox, not in a payment run. The seven reasons clients pay late start with this one.

Question 5 is the kill fee question. Agencies lose accounts mid-project. Get the answer before it happens.

The clause to request

Two sentences. Ask for them as a routine amendment, not as a stand-off.

Payment. Fees are payable within 30 days of the date of the Supplier's invoice. Payment is not conditional, in whole or in part, on the Client receiving payment from any third party. >Suspension. Where an undisputed invoice remains unpaid 14 days after its due date, the Supplier may suspend further work on notice, and agreed dates move by the number of days of suspension.

The first sentence is the one you are actually there for. The second is what gives it force, because interest at 11.75% on £4,000 is a rounding error to an agency while a paused deliverable in front of their client is not.

If the agency will not remove the conditional wording, you have learned something rather than lost something. Then the request becomes an outer date: "payable on receipt of client funds or within 60 days of invoice, whichever is earlier." An agency that refuses even a longstop date is telling you it intends to pay you out of money it does not yet have. Price accordingly, or decline.

You can put both clauses into a signable document in the browser with the contract generator, which takes custom clauses, parties, dates and a signature block and produces the PDF locally with no signup.

Pricing for a lag you cannot control

If you take conditional terms anyway, price the financing you are providing.

Stage the invoices. Bill on a fixed calendar, weekly or fortnightly, rather than once at the end. On the illustration, four invoices of £1,000 stagger the exposure and mean a problem surfaces in week two rather than in month three.

Ask for a deposit on the first engagement. Agencies hate this and often pay it. If they will not, treat the first project as a credit test and keep it small.

Cap your exposure per agency. Decide the maximum unpaid value you will carry, and stop adding work when you hit it. Two agencies at £4,000 each is a bad quarter. One agency at £12,000 is an existential event.

Quote two numbers. One rate for payment within 30 days, a higher one for conditional terms. If payment lands at an unknown date instead of on day 30, that is working capital you are supplying, and it should have a price. It also gives the agency a costed reason to fix the clause instead.

One practical note on tooling. Agencies frequently ask you to log hours in their system, which is fine and tells you nothing about your own position. A tracker records time; it does not tell you which of your four agency clients is 40 days overdue. That gap is the argument set out on the Harvest alternative page, and it is why hours in Worklyn carry through into invoices and then into a cash view rather than stopping at a timesheet. If you are running a team against agency work, role-locked financials for small studios keep the margin visible to you without exposing it to everyone on the project.

Your next thirty minutes, and the rest of the month

In the next thirty minutes: open your current agency contracts and search each one for the words "client," "third party" and "receipt of funds." If any payment clause depends on one of them, you now know which of your invoices has no due date. Write down the total value sitting behind those clauses. That number is your real exposure.

This month: send the five questions to every agency you currently work with, as a tidy-up rather than a confrontation, and add the two-sentence payment clause to your standard terms so it is in every new engagement by default. Then set an exposure cap per agency and hold it for one quarter.

Worklyn's 13 Weeks Out builds a rolling cash forecast from real invoices and expected dates, so an agency whose payments keep arriving in month three shows up as a shape in the forecast rather than as a surprise in week eleven.