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Author Topic: Billing & Overdue Payments  (Read 8004 times)
Dan Bellyk
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« on: November 06, 2011, 10:32:05 PM »
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At what point do you charge a late payment fee? I have one client has still not paid in 3 months and tonight I sent them another bill with an overdue charge of $25. What is owed is not a large amount but payment due is payment due. Just wondering how long others wait until they start charging extra. (these are large companys too)

Dan
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siebel
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« Reply #1 on: November 07, 2011, 01:10:42 AM »
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The only way to deal with this is to set your own standards and then stick by them. It is essential that you communicate your terms before commencing the job or the case is lost already.
My terms are usually 50% prior to commencement of the job, then 50% at the time of delivery of High-res files. In specific cases, I sometimes negotiate away the 50% up front and instead take 100% against High-res delivery.
I only give payment terms to clients who are giving me regular work of high value, and in these cases, never more than 30 days. I do not negotiate my dayrate, ever. You are either worth what you say or you are not and the only person who can decide this is your client.
My terms also spell out that late payments will be charged interest at an annualised rate of 18%, calculated and compounded on daily balances. This is to make sure that the payments clerk understands that if he delays payment, he will have to explain to his boss why the cost goes up. There must be clear consequences for non-complience with agreed terms. The consequences must also be significant enough to be taken seriously.
One of the major reasons why I decline to work for ad agencies (after 20+ years in the ad game) is that the agencies have gone from 30 days as "normal" to 60-90 days terms. As I am the one giving credit to the client, I set the terms. Those who balk get politely told that if they can't afford me, that's ok, we just won't be working together. Some rise to the implied insult and mostly become loyal customers who understand that I mean what I say. There is respect in that relationship. The most common excuse I used to hear (before I hardened up) was "the client hasn't paid us yet". Sorry, but if you can't manage your cashflow, that's your problem, don't make it mine. You should not accept the insulting implication that a client is doing you a favour by giving you work. It's a business relationship, not a romance. If you agree terms, you honour them, both of you. The time and aggravation spent chasing payments is better spent finding new clients who pay on time.
This sounds pretty negative on the surface of it, but since I took a stand (I am in a market where 120+ days is common), I have built a client base who love what I do for them, respect me as a business person and most importantly, pay their bills on time. This has meant I am less stressed and therefore doing better work, which in turn has seen my turnover treble since I took a hard line 3 years ago.
If you have agreed a late fee, you must charge it.  

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Bryan Siebel

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Craig Lamson
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« Reply #2 on: November 07, 2011, 07:37:47 AM »
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All of that is well and good but when your corporate client takes 45-90 days to pay as standard and then just pays the original invoice amount without interest, you are left with very few choices.

1. You deal with it, knowing in advance its going to take 90 days to get paid and that if you complain about the interest to the CFO he will just tell you that life...live with it...if you want any future work.

2.  You take them to small claims court, and then kiss that account (perhaps an account that buys a lot of photography) good bye over a very few bucks.

3.  You find a different client...if you can...that pays better.

My corporate invoices are payable upon receipt, and by and large most of my long term clients pay within 14 days. I have one this year for a very large sum that will not be paid, as the business is now gone. 

From my time as a director in a corporate setting I can tell you that the CFO will do everything he can to extend his payments outward.  We went to 37 days as standard and no one complained so he extended it to 45 and still very very few complaints so 45 became standard.   Fact of life for that company.  You either deal of lose the business to someone who will.

One more tip, never offer a discount for prompt payment like 2% net 15. They will take the discount and still pay you in 45.....

I'm very upfront with my  clients.  I tell them I'm too small to be their bank.  For the most part they understand and do a pretty good job of paying .

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Craig Lamson Photo
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« Reply #3 on: November 08, 2011, 07:06:32 AM »
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I read an online report (couple of years ago?) about Australian payment terms pushing out to an average of 56 days. If thatís the average, there must be some very long lead times pushing the average out to that extent. A mean calculation may well be more informative. I last worked for agencies twenty-five + years ago, and a couple of months was the minimum. Banker indeed.
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Dan Bellyk
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« Reply #4 on: November 09, 2011, 02:20:49 PM »
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Thanks everyone for all the input, the check showed up yesterday and the total time for payment was 3 months and one week. I am finding that the big companies are the worst and I think that this a matter of going from one department to the next. I called and thanked them for getting this resolved and told them to disregard the overdue payment charge, she replied and thanked me for being polite about the issue and hoped this would not effect future business. We started talking some more and she stated this does happen and some people get really irate and ignorant and if there is future business she tries to steer it away from them.
It pays to be polite and hold your tongue!
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Martin Kristiansen
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« Reply #5 on: December 07, 2011, 12:29:38 AM »
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The problem with big companies is they have complex systems in place to prevent fraud and to comply with sound financial management practices. As photographers our bills are change to them and to make matters worse the invoices and payments are irregular. It is important to find out what systems the companies have in place and to comply with them as closely as possible. Sometimes it is as simple as ensuring that you have purchase number. 
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mediumcool
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« Reply #6 on: December 07, 2011, 12:48:59 AM »
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The problem with big companies is they have complex systems in place to prevent fraud and to comply with sound financial management practices. As photographers our bills are change to them and to make matters worse the invoices and payments are irregular. It is important to find out what systems the companies have in place and to comply with them as closely as possible. Sometimes it is as simple as ensuring that you have purchase number. 

Vital to have a purchase order; I wouldnít accept just a number any more (I have done so) because it is so easy to get a document to somebody via email as a PDF. I donít do faxes and havenít for years, but some businesses persist in this!
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Ellis Vener
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« Reply #7 on: December 07, 2011, 08:21:57 AM »
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What do your terms and conditions say about late payments?
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Ellis Vener
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« Reply #8 on: December 07, 2011, 09:14:56 AM »
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If you have agreed a late fee, you must charge it.  

Circumstances differ in different jurisdictions, but if a client, or their representative, signs off on a document stipulating penalty interest, then legal followup is made easier. The client may not give you any more work, but that may be a good thing!
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Ellis Vener
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« Reply #9 on: December 07, 2011, 02:01:13 PM »
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Asking questions about payment schedule up front when you are working on your estimate  and then making a note on your invoice of what you were  told you  are not bad practices.
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Ellis Vener
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Creating photographs for advertising, corporate and industrial clients since 1984.
mmurph
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« Reply #10 on: December 07, 2011, 03:41:05 PM »
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It pays to be polite and hold your tongue!

Yes!

Often the people who work in large companies are as frustrated as you are about their lack of autonomy and the stupid systems that they have to work with.  It can take a person with years of experience, and a somewhat senior position, to even know how to make the system cough up the money.  Piss them off  ....

On the other hand, I have had the pleasure of working with some very rational Finance people.

I once made the mistake of charging some dog food to a corporate clients account!  I offered to pay for it, but she wisely said that it would cost them more money to process my payment than the amount in question (about $50).  So I donated the money to a good cause and we were all happy.   Wink
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gubaguba
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« Reply #11 on: January 16, 2012, 08:37:28 AM »
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I get all my expenses up front.  I like to be able to pay off the assistants and talent quickly since I appreciated it when I was there.  I can be more patient then.  Usually my anxiety is caused by pending or late bills.  Knowing those are taken care of is a great mental relief.  Big companies pay eventually and I have a contract if they don't.  Getting money up front is a good indication you will get money latter as well, another confidence builder.

 
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hasselbladfan
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« Reply #12 on: February 14, 2012, 02:07:35 PM »
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I would try to find out the reason is for his late payment. If you work with him, he will be a LT client. If you are too strict, he won't even pay your 25 usd and you will loose him on-top.

A couple of gentle reminders and phone-calls can do wonders. But not always ....
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jjj
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« Reply #13 on: February 14, 2012, 09:37:38 PM »
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I did some jobs for Sara Lee a few years back. They are a pretty large company, but they had a policy of expediting payments to small businesses as they understood that cash flow problems can cripple the smaller firms. I was paid in a week.
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« Reply #14 on: February 14, 2012, 10:21:55 PM »
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I did some jobs for Sara Lee a few years back. They are a pretty large company, but they had a policy of expediting payments to small businesses as they understood that cash flow problems can cripple the smaller firms. I was paid in a week.

Sweet!  :Cheesy
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