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“Look, it is a boring topic… but actually, it’s the boring things which make or break you.”
Jacob Casson is on a mission to help the small-to-medium sized independent agencies, production companies and studios that power the creative economy to tackle one of the biggest barriers to growth and survival: late payments.
According to UK government data, small businesses in the UK are chasing, together, a whopping £26 billion in late payments. Of that Jacob estimates £1.1 billion is owed in the creative industries, affecting independent agencies, production companies and freelancers alike.
When it comes to clients dragging their feet on payment along the marketing food chain, Jacob doesn’t think there’s anything malicious about it, though he does note that by holding onto cash, payees can earn interest, and smaller businesses are left essentially financing projects for major corporates.
“If you think of life and death cycles, the UK and the wider Western world is heading into a very big change of circumstance. You start to see all these peculiar things start to happen with all these large, seemingly powerful companies, starting to do things that don’t add up. I don’t think it’s malicious. I think a lot of times it’s pure survival,” says Jacob.
In the summer, the UK government proposed a crackdown on late payments, by making companies report on the total sums of payments made within 30 days, between 31 and 60 days and over 60 days. However, while the government has plans to introduce a mandatory 60-day cap, shrinking to 45 days after a period, these measures are still in the public consultation phase, closing on October 23.
Jacob reckons he’s spotted a gap in the market in the creative industries, where he says the nature of businesses makes it hard for companies to get bridging credit from traditional lenders. That’s why he’s created Monet, a fintech platform specifically built for creative businesses and backed financially by the likes of Paul Rippon (Monzo, Starling), Michael Fischer (Modern Capital Group), and Dan Adler (Railsr). The idea is that it allows users to track payments and invoices while also providing financing to help smaller businesses that are at the mercy of the bigger fish further up the food chain.
The initial vision for Monet was to create a platform for freelancers with some financing built in, Jacob likens it to Revolut for business. Research with the freelance creative community yielded 3,000 responses, “horror stories” of late payments dragging on for months and months on end. However, creating a solution at an individual level and at the part of the supply chain with least leverage turned out to be too complicated. Jacob realised that the model would essentially be underwriting major corporates and that,often, the biggest blocker for freelancers being paid promptly was the agencies between them and the end client.
“I realised that the biggest impact point would be if I could stabilise the agencies, 10-to-50 people companies, I could stabilise everything beneath that,” he says.
As he spoke to agencies and freelancers, Jacob started to realise that while they were great at amazing creative, pitching, account management, “no one in that space was focused on financial engineering, and why would they be?”
Another realisation was that exciting, buzzy independents are struggling to grow beyond a certain scale because of unpredictable payments. “What I started to notice was that as they got to the point where they started to have a good business, it was like the point in a marathon when a runner hits the wall, I found that these people started to hit a glass ceiling,” he says. “Agencies and production companies hit this space where the only way you’re able to compete is if you’ve got this unbelievable financial backing, and you come up against these corporates. Someone in corporate development told me that they wait for that moment before they ‘acqui-hire’ one of those super exciting young agencies… I noticed these agencies either start to fall apart or become part of a bigger agency group.”
This in turn has an impact on the scope for true competition in the agency and production space.
“Most of them are a quarter away from missing payroll… I don’t think they’re bad businesses, it’s just really lumpy upfront costs and payments,” says Jacob. ““I do think it affects the industry, because it creates a lot of stagnation, it removes a lot of the competitive nature of it… and I do believe it affects the ability of small agencies to actually get to a point where they are truly sustainable businesses.”
Jacob says that his own background, which includes a unique mix of marketing (particularly customer acquisition and performance marketing), with a short stint agency side, as well as time at fintech platforms like HyperJar, gives him a unique insight into both the worlds of money and creativity. In terms of bankrolling the platform and its users, he says that they have a group of lenders, including some that are also shareholders.
“We take money from institutions that would never normally lend to this space because of their risk structure,” he explains. “We say: we understand this space, we have the technology to integrate into it and we have the insight to be able to underwrite it.”
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