Payment due

S

stevesherrick

Well-known member
For those who are running successful video production companies, what is your policy regarding payment? Our policy is to get 50% up front and then the remainder when we deliver the final tapes, dvd, etc? We have a client that is taking exception to that policy. They don't want to pay the bill upon receiving deliverables, they want to get the tapes, and then be billed. The problem with that is we then would give up any leverage we would have to collect on that bill. Is our policy unreasonable?

Thanks,
Steve
 
Your policy isn't unreasonable, but neither is theirs. However, the only thing that matters is what you *both* agreed to upfront. You have a contract, right? If the client already signed off on the terms in the contract, you should discuss why they want to change the terms. Do they have concerns that can be addressed?
 
Unfortunately this is a client I have worked with in the past and it was more informal than we normally would do. We provided a quote but did not provide payment details in writing. The payment details are on the invoice, but it should have been presented earlier on. Moving forward, we will treat all our clients the same, providing the same policies. Quote, contract (with payment details), deposit, payment due on delivery of final product. In your opinion is it insulting to make the client pay upon delivery of finished product? We're open to suggestions. If this does not seem to fit into standard industry practices, we may have to consider changing our policies.

Thanks,
Steve
 
Depends on how much you want the work... I thought I had it bad waiting 60-70 days sometimes to get paid, then I met a guy who runs a theatrical lighting company for big whig corporate parties and such. He told me whenever he does work for a client in Washington, D.C. --any client; any political party-- they ALWAYS cross out the portion of his contract that agrees on a 30-Day invoice. He has sometimes waited 8 months or more to get paid, but the question is, how badly does he want the work? If he's unwilling to accept the terms (along with a little risk) then, he moves on.

Your policy seems pretty typical, but the question is, "how badly do you want the work?"
 
If you've worked for this company before and you didn't have an agreement upfront, I'd go ahead and deliver the product and invoice for the balance. If you haven't had any problems with the company paying in the past, there's no reason to think they're trying to pull a fast one. If they're otherwise a good client, I wouldn't make an issue of it--now or in the future. I don't think it's a bad idea to cut "established" clients some slack--if the requests are reasonable.
 
if you need the money to complete the produciton (materials, software upgrades, labor) then at least get the 50%. then you have a reason to give them why you need it now.

for almost everything I do, it is 100% 3 weeks in advance

for corporate, If I don't feel like I'm going to get screwed, I just bill them.

haven't been screwed, yet. use your intuition
 
Depending on the size of the production, I always do either 50% down, 50% upon delivery (and yes they pay in full before I hand them the master) or 25% down, 50% upon commencement of shooting, and 25% upon delivery.

I never turn over finished product without a check. In my years of doing this, I've only ever been burned once, and yes, you guessed it -- it's when I gave the client the final without getting a check first. Fortunately that was a 25/50/25 deal, so I only got rooked out of the final 25%, but it certainly taught me a lesson.

Wells has a point, how bad do you need the work? But I make sure to spell this out in the contract right up front. Because, basically, if the client has a problem with that, that's a darn good way to tell whether they're going to be a "problem client"... and it's better to know that sooner rather than later!
 
What initiated this payment concern was that we had two phases to the project. The production phase and post phase. We billed after the production phase, and we had trouble getting paid. So that's why we have been concerned about this next phase. We might just be getting paranoid, but I don't want to be in the business of tracking people down for money.

You guys have made some great suggestions. I think we will revise our policies so that we put ourselves in the best position to get paid.

Thanks,
Steve
 
We use a 50 / 50 formula in our invoicing with an integrated discount period incentive which expires either 15 or 30 days subsequent to the original invoice date. Pay on time and the discount or flat package price indicated in the estimate applies, pay subsequent to that and you're flying full-fare as quoted in the subs.

We invoice for variables (e.g., labor, expendables and post-estimate additions) instead of trying to lock all-inclusive packages where we might be painted into a corner.

e
 
Does anyone have a good contract or a link to a good contract that we could check out? Obviously, if you wrote your own or had someone draft one up, we don't want to ask you to give that away. But if there is one available out there floating on the web that we could reference as we revise our policies, that would be helpful.

Thanks,
Steve
 
We're also 50/50, but sometimes 50/25/25 if the project is more than $15K.

We don't start until we have the cash in our bank account, and we don't hand over the final until the cash is in our bank account. No exceptions, no "net-30" BS (and it IS BS -- if they're so cash-poor that they can't put up a few thousand, then RUN AWAY.)

Our standard contract is 7 pages long, and covers every contingency we can think of, or happened to us previously. It is in plain English, continuously being updated and re-written (to be shorter, not longer!)

Many companies feel confident that they can reneg on a contract because of the cost of a lawsuit. However the contract they sign with us specifically states that if there are any disputes we'll resolve them between ourselves, and then use a neutral third party (mediator), paid for by the client. This is usually enough to deter renegs.

If the client doesn't like this, they can go work with someone else. These are usual arrangements for two businesses working together, and there's something suspicious about a client that won't accept this.

That said, we will do anything for the client, and go above and beyond to get them the results they want. We always throw-in freebies, as many preview screeners as they want, edits after the contract is finished, etc.

We still get ripped off, especially by aid organizations which think they aren't bound by local laws because they have diplomatic immunity. I go through the usual channels at first, then go freakin' nuclear on their asses if I don't have cash by 30 days. Do not play nice with scumbags, because nobody in your local business community will take you seriously if you let people rip you off. Be fair and firm, and you'll be treated with respect which will help you get clients later on.
 
The fact that you had trouble getting paid is enough to be firm on your terms. Tell them your normal policy is payment on delivery, and you had cut them some slack in teh past. But problems getting paid now means you need to get paid on delivery, or raise your rates enough to cover the additional costs involved in being a bank or collection agency.

You can also get some leverage by putting YOUR copyright notice on everything you do, and transferring copyright to the client only when final payments are made. The copyright penalties would allow for some prettey significant penalties above and beyond the value of the contract.
 
galt said:
The fact that you had trouble getting paid is enough to be firm on your terms. Tell them your normal policy is payment on delivery, and you had cut them some slack in teh past. But problems getting paid now means you need to get paid on delivery, or raise your rates enough to cover the additional costs involved in being a bank or collection agency.

You can also get some leverage by putting YOUR copyright notice on everything you do, and transferring copyright to the client only when final payments are made. The copyright penalties would allow for some prettey significant penalties above and beyond the value of the contract.
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I've been a commercial advertising still photographer for 20 years, doing business with a wide variety of clients, including a few of the worlds largest advertising agencies. Maybe my experience will apply here- these are standard practices for still work.

1. The terms are typically expenses, or a percentage thereof, up front, balance due net thirty. Which the agencies typically stretch. They hate to pay their freelance creative before their clients pay the bill. Not fair, but standard practice.

2. You don't have to put any notice on any creation- in the absence of WRITTEN contract to the contrary, you own the copyright to any work created from the instant you create it. Yes, copyright is a lever you have for collection, but penalties for it's misuse are only collectable if the work has been registered with the Copyright Office. If not registered, you may only collect actual damages- no lawyer fees or punitive damages. BTW- in the video business, is it standard practice to sign over your copyright, or do you license the work for a specified period?

3. Courts have rarely (If ever) allowed the two-price system of collections, that is , one price if they pay on time, another HUGE price if they don't. Legally, you may only charge a state-specified interest rate on late invoices. In CA, I know it's about 1.5% per month. Any more than that legal amount gets into the usery laws, and a court will blast you for it.

4. Many accounts are lost when creatives try to bully their established payment schedules. Bigger companies are laden with bureaucracy to get payment approvals. It takes a little time. If you feel strongly that you won't accept 30 day terms, you will find it limits the number of clients who will work with you. Fair or not, it's standard practice.

fn
 
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