Invoicing Clients

D

DDirector

Veteran
Sorry, this is a long message, but an important one

I am working as a freelance cinematographer/videographer. I do a lot of mid-sized budgeted productions, sometimes larger gigs, sometimes smaller gigs.
I am not a production company (I am running my business under my name), but at times it feels like I am because I am outsourcing other people.

When a client reaches out to me and asks for my rates, my rates include my time and my gear.
Most of the time I have to hire a second shooter, a PA, or some additional crew - So I am rarely if ever working solo. Sometimes I end up hiring a bunch of people for the production or post-production.
When the client asks for rates, I tell them my daily rate and the rates of any other crew needed for the production.

Is it fine if I am getting the check/pay and then just distributing it amongst the other crew?
Especially if I am not a 'production company' and just working as a freelancer and have a business under my name?


I also have a dilemma on when to invoice.
Not all of my productions are not big budgets, not everyone who hires me is an established company, a brand, etc. Sometimes it's a business owner or an individual that hires me to shoot a particular video for them.
In these cases, I have been asking for payment upfront ensuring that any/all of the work I put in for the project in the production I have been pre-paid and know I won't be scammed or ripped off.

When the client asks for rates, I give them a full quote, they agree, I invoice and expect full payment in advance to confirm the booking.
If there is any post-production work on my end, I will send a final invoice when the final edit is complete, but before it is sent.

Is this a good way of doing it?
Honestly, I would prefer to be paid after the production is completed because if anything happens; we need to rent additional gear, if any rates change, additional mileage is added, parking fees, etc. Anything that increases the quote I've given them, I would be able to invoice them properly for it in the end. While how I've been doing it now is by giving them the best estimate I can.
But how safe is it to invoice them afterwards?

*This also applies for pre-production work.
How does one invoice for pre-production? Do you say it will take X number of days for pre-production and be invoiced for that? Or do you give an estimated number of days, as the number can vary?
I have never been able to properly do the estimate & invoice for pre-production work.
 
Perhaps it's different in the uk but buying and selling other people is pretty normal in every business not just video. If you invoice for a complete product, surely you are a production company. You are certainly a business. I have never done a B2B job where I've asked for payment in advance, unless to do the job requires a substantial outlay in advance. In these cases, I detail this fully in the contract negotiations. Normally we turn up, do the job and when it's delivered submit a standard 30 day term invoice. My regular freelancers do the same to me, they submit an invoice and I pay it in 30 days. This is how UK business tends to work. It also means that sometimes I have to pay an invoice I have not yet received payment for, but I MUST do this or that freelancer will be 'busy' next time I want them. Unless the project is long enough to warrant it, I rarely separately invoice for preproduction, it just goes in the invoice.

Only once have I had a project that didn't pay. It's a risk, and hurts, but that's business. I am very careful to NOT give estimates. I always fully detail an expected price which includes X days shooting and Z days post production, then I detail things in terms they understand. £X based on 3 people at £X per person, per day. Based on discussions so far this will require a minimum of 2 days shooting time on site, with three people, weather depending. I'll give options. Extra personnel etc. Things you think may suddenly be asked for. I often give a short-form price list with extras. Closer to the event I try to itemise people and things, which warms them about time and people. They often add things in emails but when they see in a list a crew list with "audio assistant - re: extra radio microphone request" they start to see crew qty going up.

On some jobs we will set a cap on price. I agree to warn them, when the likely cost is going to go over a preset figure. Works well for me.

I also include a big list of freebies which go on the invoice as £0 items. Showing how much they were not charged for softens the blow of the things they were. 2x GoPro cameras for additional point of view shots - £0 looks good.

I'm not sure if you do it but where I am paying the freelancers, I add a markup to the deal. If I am paying a freelancer £180 I invoice this at £220. I am also very careful on how I describe this. In the UK we have big tax issues with freelancers. Self-employed status is tricky for Her Majesties Revenue and Customs. Hourly rates are bad, so it will list additional sound, lighting or technical people as a single charge for services, never 8 hours at £X as this is an indicator they are an employee. Probably different elsewhere in the world.

So for me, I avoid estimates, preferring to use anticipated cost, based on...... Which allows for change. If you estimate one figure and the total doubles, this can be a huge shock. If your cost is based on two day, and they expand into four days, they already have the means to do their own re-estimate.

I do sometimes make a total guarantee when it's mainly just a one man (me) job. "It is very unlikely the project will exceed £X, but if changes to the scope of the project indicate it may, I will notify you as soon as this becomes apparent, to assist your budgeting" seems to work ok. Whenever I have a green client who requests final edit after edit I always nicely point out that of course I can change "conductor" to "director" in the credits, and as I have three hours spare tomorrow, I will do it then. The three hours comment often produces this response. "Sorry didn't realise it takes that long, don't worry about it - it's fine"
 
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With regards to being a solo operator business and then hiring contractors, how are you documenting this for your taxes? Just wanted to bring it up as you are acting like a production company by taking the full job amount as income and paying out the contractor's checks out of your account.

As far as invoices go, if you can get 100% up front then by all means do it! It lowers your risk and allows you to pay your people earlier and they are happy. If not then go down to 50% up front.
 
The invoices from the people who work as sub-contractors are one of the costs of doing business, so my total income has the costs of doing business removed, and I pay my tax on the remainder, which is, in effect, my income. It's a bit more complicated as it does mean my turnover is very high, which also means I am VAT registered, but this doesn't really matter as the vast majority of clients are also VAT registered. VAT registartion in the UK is compulsory once you reachy a threshold - £85 grand currently, I believe. Once you knock off the invoices from the others, that knocks that down considerably - but the VAT limit is based on turnover, not profit. Wedding video folk often get their money upfront, and I do ask for it when dealing with musicians, as they never have any money - but businesses never pay up front here.

It gets even sillier when one of my frequent clients also uses me as a contractor, so on some jobs that he arranges, I invoice him for what I do and he invoices the end client. On others, the role is reversed. In the UK, the only real danger is treating somebody as self-employed when they are not. Our Tax people have a number of tests that almost clarify people's status in certain circumstances. If I provide kit for a freelancer to use, tell them when to arrive, when to leave, then supervise them in what they do, giving them instructions - that could be seen as them really being an employee, and I would be liable for their tax, sickness and holiday pay, and National Insurance - which covers medical care and pension. If they are really self-employed, all that is their responsibility.
 
This is how a lot of people I know operate in Vancouver. You should charge GST on the total job (I hope you have a GST number) and then you contractors must charge you GST. This equals out that you only payout GST for what you have as income. Make sure your contractors have a GST number as well or the whole Revenue Canada machine might go into action. An audit for a sole contractor is not what you want as everyone you work with and for will end up getting audited. I had a friend that was audited for 2 years and all his associates because he wasn't charging tax on a hard drive to deliver a job........it got sorted but only after having them in his office every month for 2 years.
 
I guess GST in Canada and VAT in the UK is similar then? We too do this in and out tax wise, leaving the consumer at the end there only person who cannot claim the tax back. We often just moan that we're unpaid tax collectors! Even worse - as from April this year, all VAT registered businesses MUST keep their records on approved software that once every three months submits the returns. For most people, this means spending even more money to pay your taxes. Many people who have for years been keeping their tax and business records in ledgers and spreadsheets have had to drag themselves into the 21st Century - shouting loudly.
 
ou should form a corporate entity of some form (I don't know Canadian laws) and that should be what invoices the client. This entity pays you for your work as well as for your kit rental (two different things taxed at two different rates, at least in the US) and does likewise for other contract workers hired for the job. You should not be accepting and then passing alng the fees for others. There are tax issues as well as liability issues. What if that person is injured on the job, or if that person causes damage to someone else's property? You don't want to be personally liable in such situations.

When quoting a job it is fine to issue terms where you are paid in part or even in full beforehand. But you should have a document entitled Scope of Work, which lays out in general terms what is covered by this payment.

Sample Line Items:
- Up to three days of preproduction including a script and polish.
- Up to two days of location shooting not to exceed 10 hours per day and within 25 miles of city hall.
- One assembly edit with two polish edits not to exceed two weeks from completion of principle photography.

And so on. Note that you should use terms such as "Up to" and "Not to exceed" so that the boundaries are in your favor. You may agree to shoot for 10 hours at a given rate. If you finish in 5 you still get the full rate but if you go over you're entitled to more. Once a Scope of Work agreement is reached, I generally have included in the contract a 1/3 payment to commence work. Another 1/3 is required either at the start or finish of principle photography (depends on the nature of the job), and the final 1/3 upon delivery of the completed work.
 
Obviously up-charge for the crew you subcontract. One thing I've been doing for awhile is paying my subcontractors immediately after the shoot, as in, "Next time I'm sitting at a computer I'll pay you with Paypal," so typically within 0-3 days. If you're in this business, running a company, and have various overhead, you should have a decent rainy day fund saved up in general, so why on earth do people need to wait until their client pays them before paying the people they hired? If you're a legit business person then you'll pay your subcontractors whether or not your client pays you, so it's not like you're waiting to see if you actually get paid or not. At which point, the only reason to wait is if you're short on cash in your checking account, but hopefully you aren't if you've got a successful business going and are regularly sub-contracting people. So then, what is the advantage of waiting 30-60 days until your client pays you before you pay your sub-contractors? I don't see one. Meanwhile, you pay your sub-contractors immediately, which is not the norm, though I feel it should be, and they'll like working for you and you'll set yourself apart from most of their other clients. Now for example, when you get a low budget project they'll probably be more likely to work at a discounted rate because they like that you pay fast, and paying fast hasn't cost you a dime, yet, it could save you money in a scenario like that. They'll be more likely to answer the phone when you call, etc. I feel paying fast has lots of benefits with little drawbacks.

Last year I did half up front most of the time but for this year I've been mostly skipping that as I found sending two invoices (before and after) to be a waste of time (a.k.a, money) and last year I lost perhaps 3-4 clients because they wouldn't do half up-front, while on average I only have perhaps one client per year who doesn't pay, so the half deposit resulted in more loss of income than the risk of not getting paid.

Most of my clients these days are higher end corporate and documentary where I feel there is less likelihood of a client not paying, but yeah, if it was say a music video client or someone less established then I'd be more inclined to insist on a deposit.
 
Yes, I charge GST (13%) for my services.
But all of the contractors I have been hiring (as of lately) have not been charging GST. So when I was invoicing the client I included the taxes but excluded taxes from the contractors.
When I was paid by the client I would get my portion with the taxes and the daily rate for my contractors without any taxes. But if they are charging GST, then I would have to add that to the invoice and split it all.
It is paid to me, and I request an invoice from the contractor and I take that amount from my account.

I do not believe I should be registered as a corporate. Im pretty sure thats when I hire someone to work with me and I pay them salary or whatever it is, which im not. Im a Solo

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I have been invoicing clients before the work started to ensure I was paid for my work. The drawback is that there may be changes and additional charges added. But I have not had this issue (yet).
Perhaps I was a little bit off on mileage or parking fees. But nothing in terms of exceeding the number of production days or anything major.
The client is also aware that I charge for a full day, whether I work 10hrs or 5hrs. Anything over is considered over-time and that would be included in the 2nd invoice, just adding on the extra rates.
 
(Eric Coughlin)
Cool, thanks.
And thanks to everyone for your input.


If I invoice the client at the end of the production and give them up to 30-days to pay the invoice (Net 30) then how does that ensure me that I will be paid and not scammed?
Doesn't seem right. Is it as easy as saying, you have up to 30-days. Anything after will accumulate interest?

Actually, I've been a contractor for a few companies and I haven't been paid right away. Sometimes I had to wait for 30-day too. Other times I had to wait a week.

If it's a big company, then I would feel safer. But even then, it's iffy.
But for most of my clients, they are not big established companies. Usually smaller companies or individuals.
I quit this business a while back but as of this year I started at it again, so I feel like I'm starting fresh with this business

But I would prefer to invoice at the end of production and at the end of post-production
For bigger gigs, I could do NET 30. But for smaller gigs, I would prefer to stick with full payment or at least 50% up front.
 
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I'd be very careful about hire contractors that don't charge GST. If they are not charging GST they are not paying taxes on what they are making...... also you need to charge GST on their services even if they are not and then you are in a pickle...... what to do with the GST you have charged for a contractor that isn't charging.....
 
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For my bigger jobs, Docs, TV series, long Corp work, I do 30% down 40% at the end of shooting and 30% on delivery.
 
thekreative said:
I'd be very careful about hire contractors that don't charge GST. If they are not charging GST they are not paying taxes on what they are making...... also you need to charge GST on their services even if they are not and then you are in a pickle...... what to do with the GST you have charged for a contractor that isn't charging.....
Click to expand...

I ask them if they are charging GST beforehand. If not, then I only invoice for their daily rate.
If they are, i'll add their GST to the invoice. Not everyone is making 30K a year as a freelancer or through their business, so they don't need to charge. They have other jobs and don't need to do it.

Hopefully Im doing that right :/
 
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