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Part of Marketing agency payment terms: what is normal in the UK?
Marketing agency payment terms: what is normal in the UK?
UK marketing agency payment terms explained: typical retainer schedules, deposits, 30-day invoice terms and statutory late payment interest rates.
What to take away
- Monthly retainers billed in advance, or 30-day invoice terms, are the UK norm for agency work.
- Deposits of 25% to 50% are standard on project work, and near-universal for new clients.
- The Late Payment of Commercial Debts (Interest) Act 1998 lets a supplier claim statutory interest at 8% above the Bank of England base rate.
- Terms beyond 60 days are unusual and worth pushing back on.
- Ask what a deposit covers and whether any part is refundable if you cancel.
Typical payment terms in UK agency contracts
Agency contracts usually use one of three structures: a monthly retainer, project milestones, or a blend of both. Retainers dominate ongoing work such as SEO, paid media and content, where hours vary month to month.
UK agency payment structures
Structure
- Retainer in advance
- Monthly, set date
- Retainer in arrears
- 30 days from invoice
- Project milestones
- 30/40/30 or 50/50
- Deposit plus balance
- 25% to 50% upfront
- Commission
- % of ad spend
Typical UK range
- Retainer in advance
- SEO, paid media
- Retainer in arrears
- Media buying
- Project milestones
- Websites, rebrands
- Deposit plus balance
- New clients
- Commission
- Affiliate, ecommerce
Often used for
- Retainer in advance
- Retainer in arrears
- Project milestones
- Deposit plus balance
- Commission
On project work, 30 days from invoice date is the most common term. Agencies with finance teams often ask for 14 days. Smaller studios may want paying within 7 days. Anything past 60 days suggests the agency is funding your work from its own cash.
Typical payment terms
| Payment structure | Typical UK range | Often used for |
|---|---|---|
| Retainer in advance | Monthly, billed on a set date | SEO, paid media, content |
| Retainer in arrears | 30 days from invoice | Media buying |
| Project milestones | 30/40/30 or 50/50 | Websites, rebrands |
| Deposit plus balance | 25% to 50% upfront | New client relationships |
| Commission | Percentage of ad spend or sales | Affiliate, ecommerce |
Retainer size depends on scope, so compare quotes on deliverables rather than headline price. A £3,000 monthly retainer buys a different team at a 20-person agency than at a two-person studio. Media budgets usually sit outside the fee and pass through at cost. Our marketing agency retainer fees guide sets out typical UK bands by service.
Upfront fees and deposits
Deposits are normal, not a red flag. On a £12,000 project, a 30% deposit is £3,600 before work begins. It covers committed staff time if you cancel, so ask what it buys and whether any part is refundable.
Deposits and upfront payment limits
- £12,000example project value
- 30%typical deposit, £3,600
- £2,000threshold for splitting payments
Paying everything upfront is harder to justify. Under roughly £2,000, chasing an invoice can cost a studio more than the work itself. Above that figure, split payments across milestones.
Late payment interest and your rights
The Late Payment of Commercial Debts (Interest) Act 1998 gives suppliers a statutory right to interest on overdue invoices. The same rules let you agree different terms in the contract, provided they are not grossly unfair.
GOV.UK's guidance on late commercial payments confirms the statutory rate is 8% above the Bank of England base rate, plus fixed compensation of £40, £70 or £100 depending on the debt.
The Act itself is short and worth reading before you accept a punitive late payment clause: Late Payment of Commercial Debts (Interest) Act 1998.
In practice, few agencies charge interest, because they would rather keep the account. A 7-day reminder followed by a 14-day chase resolves most late invoices. The Small Business Commissioner handles complaints about unfair payment practices by larger customers.
A payment schedule that works for both sides
A payment schedule
- Confirm the billing cycle in writinginvoice date, delivery method and who receives it.
- Ask for 30 days from invoice date, and set your internal approval to 7 days.
- Tie project payments to sign-off rather than calendar dates.
- Check whether quoted figures include VAT, and at what rate.
- Agree out-of-scope rates and a monthly hours cap that needs written approval.
Negotiating terms before you sign
Payment terms are the easiest contract point to negotiate, because agencies expect it. Ask for the first invoice to fall 30 days after kick-off rather than before. That gives you a month of delivery to judge.
If cashflow is tight, you can trade rate for time. Accepting 45-day terms instead of 30 might cost 2% on a £3,000 monthly retainer, or £60 a month.
Take a written list to the meeting. Our questions to ask a marketing agency covers invoicing, expenses and what happens if you pause an account mid-campaign.
Common questions
What payment terms are normal for a UK marketing agency?
Most ask for monthly retainers billed in advance, or 30-day invoice terms on project work. Deposits of 25% to 50% are standard, especially for new clients.
Can an agency charge interest if I pay late?
Yes. Under the Late Payment of Commercial Debts (Interest) Act 1998 a supplier can claim statutory interest at 8% above the Bank of England base rate, plus fixed compensation.
Are upfront fees negotiable?
Often. Deposits can usually be reduced for established clients, and phased payments tied to milestones are a common compromise.
Do agencies charge VAT on invoices?
If the agency is VAT-registered, yes, at the 20% standard rate. Check whether a quoted figure includes VAT before you compare two proposals.
