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Invoice Issue (did I overstep?)
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Aaron,
Your policy is not unreasonable. Yes, many corporate clients do want net 30 or net 45 days – especially larger companies. I believe that they’ve made the calculation of using their A/R as a source of revenue.
If you trust them to pay the bill, it’s no big deal and you build in the cost of cash flow (either through your own cash reserves or a line of credit) and build the cost (time value of $) into the project cost like you would everything else.
If you can’t (or just don’t want to do that) another reasonable alternative is to request a credit card that you and have them sign an authorization document giving you the right to bill against it as the project progresses with the final charge hitting at the master hand off. You’ll have 1-2% discount fees but you can build/bury that into your fees.
Any reasonable client would understand your need as a small business to get paid in a timely manner. Sometimes a friendly discussion can persuade them see that it’s not a matter of trust as much as it is that you simply can’t afford to be their bank.
Of course if they are the unreasonable type, you should listen to your gut that you might be dealing with a grinder and let him find another producer. In my experience, when they are difficult BEFORE they hire you, they’re MISERABLE once you start the project and ABSOLUTELY UNBEARABLE as you approach the end. You know the type, endless revisions, etc…
Good luck!
Production is fun – but lets not forget: Nobody ever died on the video table!
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Maybe it’s just me, but I have to ask – why would anyone deliver a final master that’s ready for distribution (or anything other than a watermarked review/approval copy) without payment in full? Indeed, large/reputable companies with AR departments typically require net-30 terms, but they also have to provide credit applications and/or per-projects contracts to vendors in order to establish those terms … it doesn’t sound like this is that kind of client or situation.
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Hi Aaron,
Your question reminded me of an article in the December 2010 (5th Anniversary) Cow magazine. It doesn’t answer your question, but it has a few points which touch upon similar issues. Its an article by Nick Griffin called ’12 things I know about business at 55, That I Wish I’d Known at 25′.
https://magazine.creativecow.net/pdf_download/23/unzipped.pdf
From section 3: “…if the chemistry doesn’t feel right, and you can afford to, walk away before too much unproductive time is wasted”.
Sections 10 and 12 might be relevant too, but the whole article is pretty good.
Regardless of whether or not your terms are reasonable, this part would worry me: “He sees it as a personal attack and sign of mistrust”. There’s something weird and unstable about that attitude. I can understand being skeptical of a contract, but taking it as a personal attack? My instinct would be to assume that this person simply does not want to be obliged to pay on time. As Walter mentioned, maybe he just likes to push his cash flow toward his advantage (which in my opinion is still a dodgy way to do business if it’s designed to breach the contractor’s terms), but maybe he’s simply not liquid enough to be able to honour the contract that quickly. As Mike said, ‘warning flag’.
Cheers,
Dan -
I have no issues at all with your contract or terms… if you work, you deserve to be paid.
However, I found you saying “Before turning over finished work, I now require my clients to either pay on-the-spot of delivery, or sign a contract” just a little confusing.
Does that mean you do work for a client, show the the results, get approvals or changes and all that, and THEN spring this contract on them without ever having mentioned it before? If so, that’s probably what’s ruffling feathers. They may have gone in expecting net 30 terms or whatever because that’s the billing reputation you have, or the deal a colleague got, or whatever. Then suddenly after the work was done they were faced with a payment demand they weren’t expecting for several more days. They probably feel the work is being “held hostage.” I don’t think they are right, but I do see how that could upset some clients.
You definitely need to hash out all those details with a client (or a potential client) before even one bit of work is done. Contracts are signed before a job, not after.
T2
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Todd Terry
Creative Director
Fantastic Plastic Entertainment, Inc.
fantasticplastic.com
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just get half down and half upon delivery when dealing folks you don’t trust.
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