-
taking a deposit
-
The bottom line is that you aren’t a bank. You don’t make money by loaning people money. But, since extending credit (Net 30) is pretty standard in this or any business, you must act like a bank in how you size up your prospective client. Why do some people get a better interest rate on their loan terms than others? Because they are a better risk. Same goes for video business clients. Some clients you can trust based on past experience which means they’ll get better terms. Other clients, especially new ones that you have no history with, shouldn’t get the same terms.
My policy for clients that I can drive to in 2 hours or less is 50% down upon execution of the contract and the remaining 50% no later than 30 days after they have signed our Final Project Approval Form. Any new client that is beyond a two hour drive has to pay a 50% deposit to book us and the remaining 50% before they get the tapes. Several “producers” have turned us down based on these terms but more have been perfectly willing to operate this way.
My experience has been that if a client doesn’t give you any trouble about your payment terms then they can be trusted the next time around. They may be a pain in the butt to work with but you’ll never have to worry about getting paid.
Kristopher G. Simmons
Video Business Coach
https://www.MindYourVideoBusiness.com -
Don’t cave on the terms, you very likely dodged a bullet with this out-of-stater. They are probably looking at out of state vendors because they’ve burned everyone IN their state already. Also crossing state lines makes legal recovery that much tougher and potentially twice as expensive if you have to deal with authorities in both states and the delays as they work out their pecking order for the claim.
As far as Net 30 terms and large corporations… I think pretty much every corporation or large organization has an emergency fund or similar fund by another name they can tap for urgent expenses outside the normal 100-year-long payment cycle. They just never advertise that there is one. For example, if a pipe starts leaking on the floor above their main server room at 9 PM Saturday, they are not going to quibble with the plumber asking for payment upon completion of services. One call is made to some boss and that’s all, the in-house accounting boys can thunderdome it at their leisure after the fact. If they need to pay for something for the CEO that’s coming in a few hours, again, they pull out the special credit card or checkbook or whatever it is. As long as it wasn’t spent for bail money or outcall service, it’s going to be approved.
Obviously, the more you’re hurting for money, the harder it is to hold firm on your payment terms, but your only strong position is when they need the product you are holding in your hand and they are on a deadline. It always amazes me the impossible things that suddenly become completely possible (and affordable) when the Big Boss gives the peons a deadline.
Once you let that leverage go, they have accountants and lawyers that could hold you off for months and you have nothing. Less than nothing, after your legal expenses. Net 30 is often a game for them where they pretend they didn’t even GET the bill for the first 30 days. Typical tricks you’ll see are a small typo on the payment paperwork they introduce, that they then discover and claim requires canceling all paperwork in progress and they will insist a brand new invoice then be sent. Which re-sets their payment clock to 30 again. Then they might say invoices are only processed for cutting of checks every 2 weeks and you ALWAYS *just* missed this current window. Then the excuse will be that something has to be counter-signed by Mrs. so-and-so in the Fiscal Obfuscation Office who has just left due to vacation/illness/death in family/elopement/religious retreat/financial guru speaking tour/UFO abduction and probing, etc and will not be back in time for the NEXT 2-week cycle, Etc etc etc. But your stuff is on the top of her in-basket they assure you, and they’ll promise to “walk your papers thru in a jiffy” as soon as the UFO/guru/embalmer/whatever drops her back off. It’s really kind of amusing, their creativity, that is, unless you like to eat.
I repeat the mantra we have seen mentioned here before:
“I am not your bank!”
Stand firm, you cannot be bought for cheap. Let your rivals enjoy dealing with the Net 30 game instead of you.If you have aleady become sucked into this Net 30 game, one trick I’ve heard of is to address and deliver the outstanding invoice and late payment notice/letter directly to the CEO’s office. Not that they actually care any more about your bill than the person you’ve dealt with up till then, but anything coming DOWN the internal ladder from above has the weight of God behind it, moves at express speed, stamped with date and time it was receieved, and the lower level staff HAVE tor treat everything that comes down from the boss’s office with kid gloves in case the Boss follows up with a question about it. It tends to evaporate a lot of the B.S. games the lower levels play.
-
I have been the “good guy” for many years and have the outstanding invoices to prove it.
Our new policy is the same as driver’s ed…
“Go on Green”
Steve Wargo
Tempe, Arizona
It’s a dry heat!Sony HDCAM F-900 & HDW-2000/1 deck
5 Final Cut (not quite PRO) systems
Sony HVR-M25 HDV deck
Sony EX-1 on the way. -
[Steve Wargo] “”Go on Green””
I love it. I’m adopting that policy myself from this point forward.
David Roth Weiss
Director/Editor
David Weiss Productions, Inc.
Los AngelesPOST-PRODUCTION WITHOUT THE USUAL INSANITY™
A forum host of Creative COW’s Business & Marketing, and Indie Film & Documentary forums.
-
I am in a unique position in that I work for a production company (we bill net 30 – 50% up front or after the shoot – 50% upon completion of project. If shooting only, we bill 100% after shoot, but send the tapes asap whenever possible. We trust our clients to pay.)
However we also use crews around the country, for either last minute jobs or overflow, or situations where it does not make sense to fly my whole staff somewhere. In these cases, we either pay with a credit card up front in full, or get billed 100% net 30 after shoot. In all cases, tapes are shipped overnight after shoot, or handed over if I am present.
If you will sleep better having 60% deposit before a shoot, that’s fine. But when you get a call at 7am for a shoot later that day, don’t count on any money changing hands in that short timeframe.
Mike
-
She lost me at “my card’s maxed out”. Holy red flag, Batman!
-
Exactly. I was going to mention this in my earlier post but we had to run out the door. If someone has ANY financial problems, run away. If they didn’t get up-front money for you, they probably are on the road to disaster. It hurts to pass up good work but not as much as it hurts to work for free.
Steve Wargo
Tempe, Arizona
It’s a dry heat!Sony HDCAM F-900 & HDW-2000/1 deck
5 Final Cut (not quite PRO) systems
Sony HVR-M25 HDV deck
Sony EX-1 on the way. -
> Exactly. I was going to mention this in my earlier post but we had to run out the door. If someone has ANY financial problems, run away. If they didn’t get up-front money for you, they probably are on the road to disaster. It hurts to pass up good work but not as much as it hurts to work for free.
Agree, agree, agree. With this client especially with money problems, I would have politely declined the gig, but the original question focused on his credit terms.
But look at it the other way. I am often called to produce so the tables are turned. I go into a project knowing my budget so I make the calls. If Cameraman A says, “I’ll do it and send you a bill with the tapes” vs. Cameraman B, “I’ll do it, you pay me 50% now and 50% plus expenses or I don’t hand over the tapes”, well, even if CamA is more expensive I gotta think this guy’s got it going on, has a decent professional attitude… you see where this is going.
Hey I took a look, I have one client who owes me as of today about $2800 in miscellaneous charges like courier and dubs on a larger project that just won’t die. So I’m not immune to what I’ll stereotype as deadbeats, but the whole “payment 100% in full in advance” just doesn’t fly for me.
Now having said that, some of you who know me from other forums know I’m involved in a wedding video business here in Canada. Terms there: 100% paid WAAAAY up front.
I don’t believe this conversation is in that league.
– Rick
-
My policy when we’re producing and editing is 50% for the shoot and the remainder is due once the video is approved and before it’s delivered to the client.
How do you do this? Do you email them a proof? What about long videos, too long for email? ftp server download? Or is there some other way you can get approval before delivery? Great policy, and I want to do this as well.
I also think you didn’t lose anything but lots of pain by having this client go elsewhere. I echo some other posts that you “dodged a bullet” and they are probably looking for services out of state because they messed up so bad IN state nobody wants to work for them. Hurts to lose a client but much more to work for free is also very true. I think we all, as video producers, need to continually stick to our guns with our policies and avoid getting burned, which is easy to do if you don’t think ahead.
http://www.mediaartsolutions.net
-
For short projects I post them on my website and send them a link. For longer programs I Fedex them a DVD with a burned in timecode window. Once they sign off and send payment I deliver the video and copies if they ordered them.
If the client decides not to work this way, then let them go elsewhere. Once they refuse to pay upfront money,or if they hem and haw over paing a deposit they are probably not going to be easy clients to collect from anyway. Good riddance. We stick to our policy…no exceptions. This is not a volunteer business, nor are we in the business of financing their company.
Reply to this Discussion! Login or Sign Up