Payment terms

D

DBP

Well-known member
So I've been mulling this over a lot lately. I know many here and elsewhere in the video production world have recommended something in line with half up front, half on delivery.

I've often been too scared of losing clients to be pushy with this sort of thing, but here I am, ONCE AGAIN, broke at the end of the month with rent due, with thousands of dollars owed to me.

What do you do when clients claim they can't operate that way, or they insist on net 30 days? Do you hold your ground and insist, thus losing the client? Or do you just accept the lengthy payment terms from some people?

I'm at my wits end here, and I feel like I need a kick in the butt to be more aggressive.
 
DBP said:
So I've been mulling this over a lot lately. I know many here and elsewhere in the video production world have recommended something in line with half up front, half on delivery.

I've often been too scared of losing clients to be pushy with this sort of thing, but here I am, ONCE AGAIN, broke at the end of the month with rent due, with thousands of dollars owed to me.

What do you do when clients claim they can't operate that way, or they insist on net 30 days? Do you hold your ground and insist, thus losing the client? Or do you just accept the lengthy payment terms from some people?

I'm at my wits end here, and I feel like I need a kick in the butt to be more aggressive.
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I know a lot of people who would love to get terms as fast as Net 30(which speaks volumes). This is an F'd up business and if you do a lot of network TV, I can tell you net 30 would be an improvement over some of their terms. There is no dictating terms to them, they tell you how they pay and it's take it or leave it. You WILL get paid. You never have to worry about them disappearing in the middle of the night. It's just WHEN will you get paid. I have one net client that is all over the map. I can send in an invoice to the producer directly and get paid in one to two weeks, but if it's an invoice that has to go the main accounts receivable person, you are lucky to see payment in 45 days. They have been so bad at points, I know guys that were owed money for shoots at least five months old. And this is a major multi-billion dollar network, not some mom-n-pop/Joe-blow production company. I also have a client that I do some work for that does stuff for networks and they pay in two weeks. Even when you haven't sent them an invoice for the shoot, yet! I don't know if I'm trying to make you feel better or worse or If I'm just venting...?

I don't know how we got to this point. You better believe the power company gets their money from them every month. And the credit card company. And the cell phone company... I guess it's like everything else in this business, it happens because we let it happen and we let it happen, because there are some people that will always "cut a deal". And then "deals" became SOP for everyone.
 
Cary Knoop said:
No problem, they just get the deliverables 30 days later.
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Using this as a recent example.... last minute gig late in May. I shoot for a day, edit for 4. They pay well, but they of course, need the video promptly for a trade show on June 1st. Their SOP is net 30 days.

Would you tell them too bad and refuse delivery? I debated a lot and ultimately gave them their videos, but sure enough, I am expecting mid July at best before payment actually arrives.
 
DBP said:
Using this as a recent example.... last minute gig late in May. I shoot for a day, edit for 4. They pay well, but they of course, need the video promptly for a trade show on June 1st. Their SOP is net 30 days.
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I would tell them that's not an MP that's a YP.

 
For Corporate work, personally I would never put a client in a take or leave it situation, big risk of not getting a gig or losing a client. I ask for payment before deliverables on small jobs (say,$1000 - $1500) Usually that can be paid with a company credit card which may not be a problem with the client. I ask if thats OK before I start the job. If its an issue I go with their terms.

It just may be that the person you are dealing with does not have the power to push quicker payments through, or its a pain in the butt for them to hassle with accounts. Why alienate that person. Find out what works for them. If this is worked out before hand then they may be able to make sure they have the money on their credit card and you can give them a paypal invoice. Make it easy for them.

Big companies have their own payment system, often handled by an accounts department in a different location or even city. Find out before the job what can be done. With one client I can pre-bill progress payments so that I get paid quicker.

With your recent job maybe you could have given them an invoice on the day of the shoot for the entire amount which would sped up payment considerably. Negotiate.
 
doubledark said:
Negotiate payment terms upfront
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Obviously!

So if you negotiate full payment on delivery you have all the right to withhold the video if they do not want to pay.
If in that case the company bad mouths you they run the risk of litigation.
 
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Yes of course. If they agree to those terms up front then it should not be a problem because they can do it. Some companies can't do it easily. Thats the point.
 
neilmac said:
With your recent job maybe you could have given them an invoice on the day of the shoot for the entire amount which would sped up payment considerably. Negotiate.
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Didn't even know the full amount until it was over. We had negotiated day rates for shooting and editing, but they were on the fence right up until the end about the number of shooting days and whether to add additional content.
 
neilmac said:
Yes of course. If they agree to those terms up front then it should not be a problem because they can do it. Some companies can't do it easily. Thats the point.
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Exactly, and that's mostly what I was curious about. Whether those who insist on payment upfront bite the bullet and play along, decline the gig, or try to strong-arm them.
 
Unless I know and trust the company (with a good track record on past jobs) its always 50% up front if they want me to hold the date. If I'm not paid by the day before the job, I'll show up with the crew ready to take payment via credit card. Cant trust them not to screw you, you're gonna have to wait net 30-60 for the rest anyway (some large companies have us on net 90!!!!).
 
DBP said:
I've often been too scared of losing clients to be pushy with this sort of thing, but here I am, ONCE AGAIN, broke at the end of the month with rent due, with thousands of dollars owed to me.
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Some of my thoughts...

If these clients are your livelihood (no matter how late you get paid), and you're living as mentioned above, you unfortunately don't have the power to negotiate.

It's easy to say do this or do that and/or make demands, but the fact of the matter is you can't afford to lose the business (again, I'm assuming based on your words).

If I were in your position, I wouldn't change anything with my current relationships (if they are super important to sustain) and try to kindly negotiate any aforementioned terms with only new clients.

I would also most definitely have another source of income on the side, which many do in this business and/or at least quickly realize they need (at least as a freelancer).
 
NorBro said:
I would also most definitely have another source of income on the side, which many do in this business and/or at least quickly realize they need (at least as a freelancer).
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Right now my wife is in school earning nothing and we live in a very expensive city. In 3 months, she'll have a steady job with a good salary. Things are *definitely* going to be different with my negotiations then, that's for damn sure.
 
When you are in that "better" place, my advice would be somewhere around 40 to 50 percent up front, with the final product delivered watermarked for approval purposes only...the balance is then payed on receipt of the final material...if you work for large television companies freelancing, that may not be the way it works, but if payment is assured, presumably compensation is also higher and one can absorb the wait time. However a clear, concise and firm contract with a prompt/immediate payment schedule upon final delivery should be respected by any reasonable client (the kind one would want) as making good business sense. The other thing at issue putting up with such tardy payments is it creates the impression you are not "worth it" which of course you are, or they would not hire you in the first place. Lastly, there are clients who will simply hold off on paying as long as possible on some "dark principle". The stress these jobs bring to an already difficult profession, should be a red flag to steer clear of these clients at all costs in the future.
 
DBP said:
Right now my wife is in school earning nothing and we live in a very expensive city. In 3 months, she'll have a steady job with a good salary. Things are *definitely* going to be different with my negotiations then, that's for damn sure.
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Don't be a doormat, but don't get cocky, either. I've seen many people in this business think that they were unreplaceable when things were good and end up out on their @$$e$. Remember, always be polite and professional about it. Don't demand or give off the "it's my way or the highway" vibe. There is always someone else. There are hundreds, if not thousands of other people that can do what you do at least as well as you. Remember the old saying, "You catch more flies with honey than you do vinegar". This is a very relationship driven business.

Of course this is all based on clients that are actually worth having and hanging on to.
 
Hi DBP, a few thoughts for you.

You are scared of being pushy with 50 down, 50 on delivery. You are afraid it will push clients away.

Here is a counter thought: If I were hiring and someone who demanded this, while I may not like it if it were difficult or uncomfortable for me to pay upfront, I would personally respect it. It shows that you are confident and successful enough - and EXPERIENCED enough - to know this is your policy and you don't need to bend. In fact, I can smell someone inexperienced a mile away when they make unreasonable concessions... and I actually experience some loss of respect when a contractor will roll over and take whatever. It makes them look desperate.

I've also found repeatedly that people who are unwilling or unable to pay up front may not be willing or able to pay on the back end. Everybody wants something free or cheap. Everybody believes their business or finances will miraculously pull through and they'll be able to pay. But the sad reality is, without leverage, most people will do what is best for them if the going gets even remotely hard. And that's often to not pay, underpay, pay extremely late, or make up excuses for why they won't pay you.

If you've been through the hoops at all, you realize that for smaller jobs, the legal system is all about useless. The amount of time, energy, cost, and risk it would take to pursue anything in the mere thousands is counter productive. And anyone who knows this knows they can jerk you around, if they so desire. Paperwork on these sorts of jobs is sometimes more of a cute formality. You can have the best contract in the world. Want to spend $10,000 + 9-12 months+ defending it for a $2,000-3,000? Frankly, it's more a false sense of security.

Cash talks. Cash is your only security. It's 50% down, 50% on delivery. Or for a larger project, 50% down, 50% distributed payments until delivery. Depending on the project, expenses separate.

Let me ask you this: let's say you lost 1-2 clients with your policy. What would you have saved with the policy, in terms of the thousands you are owed + all the time you put into it?

The oldest and most powerful sales tactic in the book is being willing to walk. I suggest you adopt that not as a tactic, but as a wise policy: 50% down, 50% delivery. No check, no start, and definitely NO DELIVERY until payment in full. This is your only leverage. Preserve it.

As others said, there is zero reason why this has to be a rude or arrogant policy. It can be charming, professional, courteous and polite. Firmness is not rudeness, those are two separate traits that can absolutely mix but by no means need to or should.
 
Run&Gun said:
Don't be a doormat, but don't get cocky, either. I've seen many people in this business think that they were unreplaceable when things were good and end up out on their @$$e$. Remember, always be polite and professional about it. Don't demand or give off the "it's my way or the highway" vibe. There is always someone else. There are hundreds, if not thousands of other people that can do what you do at least as well as you. Remember the old saying, "You catch more flies with honey than you do vinegar". This is a very relationship driven business.

Of course this is all based on clients that are actually worth having and hanging on to.
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Oh I definitely lean towards being a doormat, mostly due to fear of needing whatever we get to survive. The irony is that the present is when being a hardass on payments would help me out the most. Frankly, I won't really care how long they take when my wife is working, but at the same time I feel like it's the principle of the matter and I don't want to further encourage clients to take their sweet time.
 
Two books may be helpful: "Getting to Yes" and "Never Split the Difference".

Two take-aways from them:

Getting to Yes: If you can't negotiate on terms, negotiate on principle. It changes the game. Instead of arguing about when the payment is or should be, start questioning the rules of the game and inquire as to why they feel those terms are fair, and discuss why they are not fair for you. You can do this is a personable and courteous manner, helping them see your side but also forcing them to explain the principles behind the terms from their angle. This can be surprisingly effective.

Never Split the Difference in big on utilizing "how" questions. Why can sound attacking; ask every why question as a how. "How am I suppose to book that date and perform days of editing labor with no security up front?" The bonus here is it forces the person answering to attempt to solve your problem. "How is that an equitable arrangement?". This a great way to rephrase "why do you feel that is fair", and the way they answer may indicate if you want to work with them at all.

Delivery is everything. You can say this like an @$$ hat, or you can politely say "I would so love to work with you, this sounds like a great project. My standard policy is 50% down, 50% on delivery, but it sounds like that isn't possible for your company. I'd love to find a solution. Can you help me understand what about those terms don't work for you?" "Ok, I see, I am just trying to figure out how to make this an equitable arrangement for my company as well" [WAIT.... embrace the awkward silence]. "How do you think we can work together on this?" Etc.

BTW, you'll be surprised. Most people worth working with want to be fair and reasonable, so you may quickly find a concession of "well, we could do 25% now, 25% on the day of the shoot, and 50% at time of delivery... would that work?".

Stay calm, be patient, and ask yourself "what would I do if I wasn't desperate"?

By the way, there is no reason you can't backpedal a "no" after some polite negotiation and come back and say "hey, this is an exception to my policy but I'm just really excited about the project. And I'd love to earn you as a client. Let's do XYZ as terms." The only way you can't do that is if you sound like a hard @$$ about it, rather than having a polite but firm and confident discussion in a laid back, professional way.

Remember, think of negotiation not as "getting your way" but trying to find an equitable solution for both parties. There is nothing non equitable about 50/50, it's literally splitting the risk.
 
This old subject....

I've been at the short end the stick, i think we all have.

Over the years i've been more fortunate to have found better clients, or maybe it's that i learned to avoid the bad ones. In some cases the key is weeding out bad clients, and for that i have my invoice/contract

I've followed these types of discussions and they helped me refine my 1 sheet invoice/contract. Having everything laid out on 1 sheet helps keeps things clear. keeping the terms simple bullet points helps too. If the client requests NET terms, OK, here's my late fees if it's missed, and one of my key terms is that the rights don't get released until the full payment is received.

Being upfront and keeping your nose open is key, i don't hard-line my clients, if felt the need to, i would question whether or not that client is worth it
 
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