How do you deal with clients not paying on time?

[Scatterbrain]

either way - don't part with finished product until they either pay (small) or sign off as a done deal (big)

Unfortunately it just isn't that easy in film/video production. We cannot submit a final invoice until the shoot and edit is complete by which time the product (final video) would have been long delivered (especially the larger companies who have 45 - 90 days invoicing periods!).

So we have to look at ways of encouraging clients to pay on time and then ramp up the pressure as suggested when they don't.

 

[RedEvo]

Send them a watermarked final cut and advise the non watermarked version will be delivered on receipt of final payment?

d

 

[Geoff T]

Unfortunately it just isn't that easy in film/video production. We cannot submit a final invoice until the shoot and edit is complete by which time the product (final video) would have been long delivered (especially the larger companies who have 45 - 90 days invoicing periods!).

So we have to look at ways of encouraging clients to pay on time and then ramp up the pressure as suggested when they don't.

Send them a watermarked final cut and advise the non watermarked version will be delivered on receipt of final payment?

d

Options and lateral thinking... always good...

 

[castman]

I used to have the same problems when I was a theatrical agent, client fees were always late and the bigger the production company or ad agency, the later the fees. I had a number of tactics that worked with various degrees of success, and include:

1. An invoice with was higher than the original quopte, with a note stating that payment within X days/weeks would be subject to a 10% settlement discount (that would reduce the amount owed to the quoted price.
2. As above but would state to the company at the time of quote that the above would apply.
3. Offer a 10% discount on the next job if this invoice is settled on time.
4. If the payment is a day late call them and ask if they are in fananical difficulties - only you heard from an associate that he hadnt been paid either/the company was in difficulty (that gets staff worried too!).
5. if what you are producing is broadcast, then threaten you'll have the TV company withdraw it, as the copyright for them to broadcast is granted only upon payment - I've actually seen that on contracts for commercials, music videos and even corporate videos that are to be shown publicly
6.Send a letter saying the late payment is being escalated and referred to a collection agency and advise that if the debt is handed over to a collection agency, then costs will be added to the original invoice - that's a final one for the real pain in the butt companies.

The problem with our industry is that everything and everyone are so very informal and people do try it on. What is worse is the fact that they can easily take offence and not deal with you again, they also know that you are one of a hundred other video production companies in the area, so tact and humour has often been key to my success.

I once made a headed paper from the ficticous 'Ackney Acme Collection Agency' with 'That' photo of Reggie & Ronnie Kray in the top corner, on the page I wrote words to the effect that if the bill isn't paid by return our 'celebrity duo' would be round to collect payment or bruises to the value of £X - that really did work on more then one occassion - yes, sure you have to be careful who you send that kind of humour to and I probably broke a few copyright laws too but the end result was positive

 

[TheEngineer]

Scatterbrain

I work in the same "industry" (media) but the nature of what we do is that the bulk of our income is recurring and we provide a service that is essential and difficult to replace quickly.

Normally our relationships are very much with the managers we deal with day to day and they are often a great help when collecting payment. We once had a manager phone up the head of accounts to say that unless we were paid by the end of the day we would stop supplying (which would be comparable to someone cutting off the water supply!). Now we and the manager both knew we wouldn't go through with it, but the accounts people didn't know that!

Obviously this only works with big companies and not small clients.

For the benefit of people who don't know, the video production industry is full of "bottom feeders" that are scrambling around looking for any work (a bit like the ebay bedroom sellers mentioned in another thread). These companies tend to set up and close down very quickly. Often they are media graduates who cannot find a job in a massively oversubscribed job market. On that basis they pretty much accept any terms and conditions.

Back to the issue for Scatterbrain. Depending on what you are delivering, a watermarked copy is an excellent idea. You can plaster an obvious "approval copy only, not for use or distribution" watermark on the video and send it to them with a letter / E-mail asking for confirmation that they are happy with the finished product and that they accept your terms and conditions for payment.

As has been pointed out, copyright stays with you / the originator of the material (make sure you have a contract assigning copyright to your company signed by anyone who does work for you, either as staff or as a freelancer). If any material is due for broadcast then you can cause a stink with the broadcaster but that will almost certainly lose you the original client!

The toughest part for any small production company is creating the growth you need to survive (we have several staff). Once you have multiple income streams and a cash cushion it gets (a little) easier!

 

[patientlady]

Hi Scatterbrain
I have always thought that asking for money is as important as asking for the business in the first place. If as much effort was made in both areas its a marriage made in heaven

As said above don't let the big boys bully you. Chat up the credit controller, ask if you can collect a cheque, follow it through (its easy to get side tracked). Do you have a card terminal? That might be an idea to collect deposits and final payment on completion rather than waiting a further 30 - 60 days! How do you want to pay, rather than when do you want to pay

Best wishes p/l

 

[Suzuki]

1. An invoice with was higher than the original quopte, with a note stating that payment within X days/weeks would be subject to a 10% settlement discount (that would reduce the amount owed to the quoted price.

That doesn't sound legal. You can't invoice someone for more than you agreed, even if you build in a discount to take it back down to that level in some circumstances.

 

[roydmoorian]

Originally Posted by castman
1. An invoice with was higher than the original quopte, with a note stating that payment within X days/weeks would be subject to a 10% settlement discount (that would reduce the amount owed to the quoted price.

That doesn't sound legal. You can't invoice someone for more than you agreed, even if you build in a discount to take it back down to that level in some circumstances.

Probably in the T's & C's small print and shouldn't be a problem just so long as you did not expect extended credit terms. :|

 

[old boy]

I got a letter from a solicitor that basically outlined my options and said that if payment was not forthcoming I would be considering the options open to me

It is non threatning and generally gets a response
if they still are not paying then they probably wont

I got a good debt company with a one off fee about 3 years ago for life membership
they then chase them and add 20% costs on top

cheers

 

[RedEvo]

As a last resort I set Mrs RedEvo on them. She might be small (and perfectly formed) but boy does she get results. Her charm offensive has a high success rate

d

 

[Stevelyons]

i just had one experience then i really don't care who is he, if he is not paying on time then i say to him , pay on time or you can find any other service provider. but it helps me a lot, now i have only those clients who really appreciate my work and pay on time. you should apply these rules to, its hard but at last you will get good results.

 

[Bobb1979]

Its frustrating when people don't pay properly for services agreed and/or rendered.

I have a zero tolerance on this issue and have drawn into all contract terms and conditions stating that there will be a late charge of £30 if not cleared/paid by the agreed date. They sign to agree and I verbally explain from the offset.

I have to say that its a very small percentage of people who try it on ( about 1% ) of a total of over 1200 currently contracted. I call these debtors frequently by phone or at home personally and ensure that all my fees for my time are paid at a rate I decide is appropriate.

It infuriates me hearing how some people refuse to pay their way which puts many small/medium businesses into financial difficulties.

If I were too soft and didn't get signed contracts my company would be in the ground, I work too hard to let this happen.

 

[iconic]

Its frustrating when people don't pay properly for services agreed and/or rendered.

I have a zero tolerance on this issue and have drawn into all contract terms and conditions stating that there will be a late charge of £30 if not cleared/paid by the agreed date. They sign to agree and I verbally explain from the offset.

I have to say that its a very small percentage of people who try it on ( about 1% ) of a total of over 1200 currently contracted. I call these debtors frequently by phone or at home personally and ensure that all my fees for my time are paid at a rate I decide is appropriate.

It infuriates me hearing how some people refuse to pay their way which puts many small/medium businesses into financial difficulties.

If I were too soft and didn't get signed contracts my company would be in the ground, I work too hard to let this happen.

Bobb1979,

What is your line of business?

Andy

 

[Bobb1979]

Hi Andy

I'm in the service industry , I have no stock , people buy my time for my expertise in a particular field.

 

[alasdair1982]

Hi

This is something i have had many problems with but i have one particular problem with a customer who have been feeding me no end of bs. Basically they owe me just under £1000 from April on a 30 day term. I started chasing at the end of May and this went on for some time without success.

After many many unsuccessful attempts phoning, sending letters, emails all to the financial dept and getting all the bs in the world. The amount of times i have been told they have sent it you wouldnt believe ..

so on Monday, I sent them a letter simply stating that they have 7 days to pay which expires 20th August after this time i am passing this debt to a local debt recovery company.

It has worked because the financial director of the company called me today assuring me he was sending a cheque today.

So basically sent them a snotty letter threatening legal action and if they dont answer or pay pass the debt onto a recovery agent

 

[roydmoorian]

Hi

It has worked because the financial director of the company called me today assuring me he was sending a cheque today.

It hasn't worked until the cheque has cleared.

 

[ludwig]

I agree that late payments are getting worse. About 50 percent of my customers pay on delivery (the small ones mainly of course) and about 25 percent then go on to withhold payment as long as they can. Late payers get a statement first, then a late payment letter, then a phone call. Only twice in twenty years has their been a problem after that. The first told me that the director was out ( when I could clearly hear his voice in the background) so I sold everything that they had on order to someone else and the second was a piddly sum but they annoyed the hell out of me because they were just too disorginised to get a cheque in the post. I wrote 5 times and a staff member said that the letters were all in the post tray unopened so I did small claims on line which was easy and a cheque came within a few days including the small claims fee. I wouldn't want to use this too often but it worked this time.

 

[ludwig]

My neighbour is a builder. Our local pub wanted some work done and he got the job. When it was finished the landlady couldn't pay so he has had to spend the money that he had saved for the last two years for a holiday of a lifetime just to pay off all his suppliers. He has been waiting for 10k since last autumn. That's a hell of a sum for a one man band. It would put many out of business. She shouldn't have had the work done if she couldn't pay.

 

[I Love Spreadsheets]

RedEvo had the right idea with the watermark idea - Just a simple banner across the screen with your company name. Make it about 50% transparent so they can still see the final thing. Or put in a voice over ever minute or so that says "provided by...."

They only get the non-watermarked / voiced over version on final payment.

Make sure its in your T&C's and they are aware that it is payment on delivery or they dont get the unwatermarked version.

As a programmer I only provide time limited software until the final version is received. This serves two purposes (1) it gets me paid (2) the client is signing off that it does everything he needs and he has tested it and found it to be in full working order.

It is a case of protecting yourself beforehand rather than chasing afterwards.

 

[willitbe]

My neighbour is a builder. Our local pub wanted some work done and he got the job. When it was finished the landlady couldn't pay so he has had to spend the money that he had saved for the last two years for a holiday of a lifetime just to pay off all his suppliers. He has been waiting for 10k since last autumn. That's a hell of a sum for a one man band. It would put many out of business. She shouldn't have had the work done if she couldn't pay.

Let that be a lesson in not taking staged payments or putting in applications on a monthly basis..

 

[termsandconditions]

My neighbour is a builder. Our local pub wanted some work done and he got the job. When it was finished the landlady couldn't pay so he has had to spend the money that he had saved for the last two years for a holiday of a lifetime just to pay off all his suppliers. He has been waiting for 10k since last autumn. That's a hell of a sum for a one man band. It would put many out of business. She shouldn't have had the work done if she couldn't pay.

That's a crying shame, ludwig. It's also an expensive lesson learnt by your neighbour. Hope he's at least trading on a deposit & staged payments basis by now. The landlady needs chasing hard by professionals and any CCJ upgraded as soon as possible to a writ so that HCEO's can 'get involved'.

Best Regards

 

[Blood Lust]

Hi there,

My first post here.
I run a small business from home with my partner and we have a big problem with our clients not paying on time (I've just joined the forum - sorry if this kind of question has been asked many times).
It seems to be getting worse and worse lately. Out of ten invoices we issued in May, only two were paid on time.

I would really like to know how other small companies deal with late payment?

We do state in our invoices that interest will be charged on overdue invoices, but nobody seems to care and we once re-issued a new invoice with the charge to one of our clients, but they just ignored the new one and paid the original amount.

What is the best accounting practice - to add late payment interest to the original invoice number and resend the invoice, or to create a new invoice with just the late payment interest?

Thanks

Make your customers earn the right to have credit dont grant them it at the beginning.

If after 3 months they paid all their invoices on time then allow credit.

 

[debtcollector]

Hi were new to this forum but we are debt collectors or rather lawyers specialising in this.

The advice we give clients is mark on all your invoices your terms i.e. 14 days, 28 days etc.Also place on the invoice that "all our invoices are subject to the late payment of commercial debts act 1998". This will allow you to recover set costs and interest if you have to start on the court route.
In the interim this may sound obvious but you'd be surprised by those who get this wrong.
say your terms are 28 days, so on the 30th November you invoice, (the date must say the 30th November ) the next reminder should be the 28th December, then the 27th January should be the final reminder. The reason the date is so important is that so many business' invoice on the 1st of the following month, then they get all the usual excuses, that its missed the end of month cheque run/transfer, that the invoice was dated in December therefore it will be looked at in January etc

If one of our customers has sent the invoice and two reminders then on the 27th Jan we would get the invoice from the customers so we can begin the court proceedings with it.
hope that helps, now back to working out what you need to do when your new on this forum.

 

[Payatrader]

Hi,
Have you considered asking for payment immediately, once the work is completed or goods sold, by credit or debit card? This may cost a little extra (unless you add the charges onto the bill) but once a transaction is authorised you know the funds are on the way. Beats waiting for cheques to arrive in the post.

Linda