Why PPC agencies should verify client credit before large ad campaigns

Key takeaways

• Fronting ad spend is a massive risk. If a client doesn't pay, you're left holding the bag for thousands in media costs, which can cripple your agency's cash flow.
• A simple client evaluation checklist is your first defence. Systematically checking company details, payment history, and contract terms helps you spot red flags early.
• Prepayment agreements are non-negotiable for new or risky clients. Requiring funds in advance for the media spend, or at least your fees, removes your financial exposure.
• Risk scoring tools provide objective data. Using services like Creditsafe or Experian gives you a financial health score beyond gut feeling, informing your payment terms.
• This process protects your profitability. The time spent on PPC agency client credit assessment saves you from write-offs and ensures you're working with financially stable partners.

What is PPC agency client credit assessment and why does it matter?

PPC agency client credit assessment is the process of checking a client's ability and likelihood to pay you, especially before you spend their money on ads. It matters because your agency's survival depends on it. Unlike other marketing services, you often pay for ad spend upfront and invoice the client later.

This creates a dangerous gap. You are essentially giving your client a short-term loan for their advertising budget. If they default, you lose the media cost and your fee. For a PPC agency, a single large bad debt can wipe out months of profit and strain your cash flow to breaking point.

Think of it like a bank giving a mortgage. The bank checks your finances first. You should do the same before committing your agency's cash to a client's campaign. This isn't about distrust. It's standard commercial practice for any business extending credit, which is exactly what you're doing.

How does fronting ad spend put your PPC agency at risk?

Fronting ad spend means your agency pays the platform (like Google Ads or Meta) first, then collects the money from the client. This puts all the financial risk on you. The client gets the benefit of the ads immediately, but you wait 30, 60, or even 90 days to get paid.

Your cash flow is directly tied to your clients' payment behaviour. A late payment doesn't just delay your income. It can stop you from paying your team, your freelancers, or even funding the next client's campaign launch. In our experience working with PPC agencies, this is the most common cause of sudden cash crunches.

The risk scales with the budget. A £500 late payment is annoying. A £50,000 unpaid invoice for media spend is catastrophic. Without a proper PPC agency client credit assessment, you are gambling with your business's working capital every time you start a new campaign.

What should a PPC agency client evaluation checklist include?

A PPC agency client evaluation checklist is a simple document that guides your credit check. It ensures you don't miss critical steps. Your checklist should start with basic company verification. Check the client's full legal name, registered address, and company number on Companies House.

Next, assess their payment history. Ask for trade references from other suppliers. Check how long they've been in business. A brand-new company might be riskier than an established one. Review their requested payment terms. A client demanding 90-day terms before you've even assessed them is a red flag.

Finally, define your thresholds. Decide what level of media spend triggers a full credit check. For example, any campaign over £5,000 per month might require a deeper look. Having this checklist turns a subjective feeling into a clear, repeatable process. It protects your team and makes commercial decisions consistent.

How can risk scoring tools help with client assessment?

Risk scoring tools provide an objective, data-driven view of a client's financial health. They go beyond what a client tells you. Services like Creditsafe, Experian, or Dun & Bradstreet generate a credit score and report for UK companies, often for a small fee.

These reports show credit limits, payment performance trends, and any county court judgments (CCJs). A low score or a history of late payments tells you to proceed with caution. You would use this information to decide on payment terms. A high-risk client might need prepayment, while a low-risk one could qualify for net-30 terms.

Using risk scoring tools removes emotion from the decision. It's not about whether you like the client. It's about their financial behaviour. For a modest cost, these tools give you the confidence to say yes to good clients and structure safe terms for risky ones. They are a key part of a professional PPC agency client credit assessment.

When should you use prepayment agreements with PPC clients?

You should use prepayment agreements whenever the risk is too high for your agency to carry. This is most common with new clients, clients with poor credit scores, or campaigns with very large monthly ad budgets. The agreement simply states the client must pay for the media spend (and sometimes your fees) in advance.

A standard structure is "payment in advance for media, fees invoiced monthly in arrears." This means the client transfers the ad budget to you before the campaign goes live. You then use their money to pay the platforms. Your risk drops to zero. Your fee for managing the campaign is billed as normal after the work is done.

Prepayment agreements are also wise for short-term, high-intensity campaigns. A client wanting to spend £20,000 in one month for a product launch presents a concentrated risk. Getting that £20,000 upfront protects you. It also tests the client's commitment. If they won't prepay, it may signal they don't have the funds available.

What are the warning signs of a potentially bad PPC client?

Several clear warning signs can flag a potentially bad PPC client before you start work. The first is evasiveness about their business. If they are unclear on their legal structure, avoid providing company details, or get defensive when asked for a contract, be wary. Transparency is the foundation of a good partnership.

Another major sign is unreasonable payment terms demands. A client insisting on 90-day payment as a standard requirement is often struggling with their own cash flow. They want to use you as a bank. Similarly, clients who haggle excessively on your management fee but are casual about a large ad budget can be problematic.

Watch for a history of changing agencies frequently. Ask why they left their last PPC provider. If they blame every previous agency for poor results, the common factor might be them. Finally, poor communication during the sales process usually gets worse, not better, after they become a client. Trust your instincts if something feels off.

How do you build credit assessment into your onboarding process?

To build credit assessment into your onboarding, make it a non-negotiable step between signing the contract and starting work. The first action is to run your client evaluation checklist. Collect all necessary company information and trade references at the outset.

Next, define credit limits based on your risk scoring tools. Set a monthly credit limit for each client, which is the maximum ad spend you will front for them. For a new client, this limit might start very low or at zero, requiring full prepayment. You can increase it over time as they prove they pay reliably.

Finally, document everything in your service agreement. The contract should clearly state your payment terms, late payment fees, and your right to pause services if invoices are overdue. This formalises the process. When new clients see this professional approach, it actually builds confidence. They know they are dealing with a serious, sustainable agency.

What happens if a client fails a credit check?

If a client fails a credit check, it doesn't always mean you can't work with them. It means you need to structure the relationship to eliminate your risk. The primary tool for this is a prepayment agreement. Explain that due to standard financial procedures, you require media funds in advance for the first few months.

Frame this positively. You are protecting their campaign from any disruption. If their payments are reliable for, say, six months, you can review the terms and potentially move to standard invoicing. This turns a potential "no" into a "yes, with conditions." It allows you to take on promising clients who might be startups or have had past issues.

If a client refuses any form of prepayment or secure terms, walking away is the safest business decision. The potential profit from one client is never worth the risk of a debt that could threaten your agency's stability. A rigorous PPC agency client credit assessment gives you the data to make that call confidently.

How does good credit management improve agency profitability?

Good credit management directly protects and improves your agency's gross profit. Gross profit is the money left after you pay for the ad spend and your direct team costs. Every pound written off as bad debt comes straight out of this profit. Eliminating bad debt through assessment means more profit stays in your business.

It also improves your cash conversion cycle. This is the time between paying for ad spend and getting paid by the client. Shorter cycles mean your money is tied up for less time. You have more working capital available to invest in growth, hire staff, or take on new opportunities without needing a loan.

Finally, it reduces administrative cost and stress. Chasing late payments consumes account management time that should be spent optimising campaigns. By working with financially stable clients who pay on time, your team is more productive and your client relationships are healthier. This operational efficiency boosts your bottom line.

Where can PPC agencies get help with financial risk management?

PPC agencies can get specialised help from accountants and advisors who understand the unique economics of performance marketing. Generalist accountants often miss the specific risks of fronting ad spend. You need a partner who speaks your language and knows what a healthy PPC agency balance sheet looks like.

Specialist accountants for PPC agencies can help you set up robust financial controls, design safe client contracts, and implement reporting that flags cash flow risks early. They can also advise on tools and systems to automate parts of the credit assessment process, saving you time.

Investing in this expertise is a strategic move. It lets you focus on delivering great results for clients, secure in the knowledge that your business's financial foundations are solid. Getting your PPC agency client credit assessment process right is a major competitive advantage, allowing you to scale with confidence.

To understand how your agency stacks up financially and identify areas where cash flow might be at risk, try our free Agency Profit Score — a quick 5-minute assessment that reveals your financial health across profit visibility, revenue pipeline, cash flow, operations, and AI readiness.