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Why do the larger corporate clients take so long to pay?

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Michael FolorunshoWhy do the larger corporate clients take so long to pay?
by on Jul 9, 2009 at 11:42:24 pm

Every time I cover some sort of corporate event for a big company, they take ages to pay. I'm talking around the 30 to 60 day mark.

I can understand and assume that they have to have an organized expenditure system so that they can keep tabs on where exactly all their marketing budget is going but sometimes I feel the time it take to receive payment is excessive.

They do always pay eventually though. The annoying thing is that the PR people that hire me can never give me a decent estimate on when I'll receive payment. Should I be demanding a more accurate time frame or exact date? Or should I just chill out and except that big companies drag their feet when it come to paying their videographers?


Michael Folorunsho
Clicktone Media

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David Roth WeissRe: Why do the larger corporate clients take so long to pay?
by on Jul 10, 2009 at 12:06:14 am

It's the way of the world Michael and you'd best get used to it, because you can't fight bureaucracies and win. They have their ways of doing things and they got big by sticking to their methods.

You have the choice of working for big companies who always pay, but who pay in 3-60 days, or you can work with smaller companies who may have less red tape, but who also lack stability, and who sometimes don't pay at all. It's your choice...

David Roth Weiss
David Weiss Productions, Inc.
Los Angeles


A forum host of Creative COW's Apple Final Cut Pro, Business & Marketing, and Indie Film & Documentary forums.

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Michael FolorunshoRe: Why do the larger corporate clients take so long to pay?
by on Jul 10, 2009 at 12:15:17 am

Thanks for your response David,

Well at the moment I work with both. Glad to know this isn't just limited to my experiences then. I guess I'll learn to live with it.

Michael Folorunsho
Clicktone Media

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Todd TerryRe: Why do the larger corporate clients take so long to pay?
by on Jul 10, 2009 at 4:09:47 am

I think it all depends on your perspective. Interesting that you say "they take ages to pay. I'm talking around the 30 to 60 day mark." Well, in the big corporate world, 30 or even 60 days isn't "ages" by a long shot... it's par for the course. In some circles that would even be considered quite darn fast.

Different clients work different ways. Our biggest big jumbo corporate client usually pays within a week. We have one small mom-and-pop corporate client that takes months to pay. I'd say on average our big corporate clients probably hit in the 30-45 day range, which I think is probably typical. The really big ones seem a bit puzzled if you hound them for money before, say, the 90 day mark. (Huh?? We just got that invoice... in April.")

I think that's just the way it is, and with the big guys there's not much you can do to fight it. Demanding faster pay (before or after you do the job) probably will just be wasting your time... the people that hire you are never ones counting beans or writing the checks. Its sad that they depend on the little guy to "be the bank" but in a lot of instances that's just the way it is. I think it's probably up to you to decide whether you can live with their pay schedule. If so, great, and tough it out until the checks arrive. If not, best just to politely decline the gig and move on to clients you know will pay faster.

Not necessarily fair, but not much you can do about it, either.


Todd Terry
Creative Director
Fantastic Plastic Entertainment, Inc.

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Nick GriffinRe: Corporate clients... once upon a time
by on Jul 10, 2009 at 2:08:14 pm

Once upon a time, long, long ago (I believe in the 1980's or so) an accounting genius went to his bosses with an idea. It went something like this:

"You know we're a big, solid company with lots of payables going out every month and when an invoice is marked 'Payable Net 30 Days' we've been doing just that. So, what if instead of paying our vendors in 30 days we pay them in 60, 90 or maybe even 120 days? That would be just like getting an interest-free loan for those extra months and if we apply this to the hundreds of thousands or even millions of dollars in monthly payables, the amount we would have been paying to have this money in our cash flow becomes quite significant. And remember, this money, let's call it our 'float' will be ours to use interest free."

"But, " said one of the bosses, "If we stop paying promptly what are our vendors going to do?"

"Absolutely nothing," said the accounting genius. "We're the XYZ Corporation. Everyone knows we're good for it so if they want to do business with us they'll just have to learn to live with it. And since our credit rating is more a function of our balance sheet and stock price than anything else, what have we got to lose?"

"But what about the smaller vendors?" said another boss. "You know the little guys like the people who do our video and A/V work. They really need their money and they think they deserve to be paid in a timely manner."

"Oh, stop, " said the genius clutching his sides and barely able to speak through his laughter. "You're killing me. What are you some kind of monologue writer for Johnny Carson?"

The entire room erupted in laughter as everyone got up to go out for a three martini lunch to celebrate the accounting genius' promotion and bonus.

And the next month when the accounting genius was put on the cover of Accounting A-Holes Magazine all of his peers in other big companies read about this revolutionary technique for providing their companies with free money for their cash flows and the idea spread.

There now. Doesn't that make it much easier to understand?

But seriously folks... the one way that I've found to get paid quickly in big corporations is to have a close relationship at the top.

One of our corporate clients a few years back sent out a letter to its vendors announcing that effective immediately it would be paying "fully processed" invoices net 60. (The term 'fully processed' and similar wording means after everyone in the chain is through doing everything they can to slow down the approval for payment of a bill.)

Since I was hired by the company's president and have many of my dealings with him I called him with a great idea. "Hey, Bob," I said. "I just figured out how you can save a lot of money: simply tell your CFO that starting this month his paycheck will be delayed one month. Better still delay the entire accounting department. That'll save the company a fortune."

His response was to ask me to send all invoices directly to his attention and ever since each invoice has been paid in 7 to 10 days.

Doesn't work every time, but did in this case.

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Bob ZelinRe: Why do the larger corporate clients take so long to pay?
by on Jul 10, 2009 at 8:08:16 pm

Terry writes -
Well, in the big corporate world, 30 or even 60 days isn't "ages" by a long shot... it's par for the course. In some circles that would even be considered quite darn fast.

Well, this is my favorite story (funny to me, but not at the time) -
I was in NY working freelance for Citibank (Citicorp). You know, the big multibillion dollar bank, for their corporate video department. I had employees, and I had to make payroll. They hired me ALL THE TIME, and I was making good money, but I was not getting paid. Month after month. I pleaded with the division manager that I needed to get paid, and they promised me, week after week - but no check ever showed up. And money flowed from my savings account into my employees pocket. I became more aggresive (4 - 5 months into this ordeal), and I was promised that a check would be cut on Friday for the total amount owed me. Friday came and went - no check. This is now real life, not Creative Cow. I didn't know what to do.
I was livid, but I didnt' know how to proceed. I called the main corporate offices of Citicorp, and asked for the presidents office. It was 6pm. A gentlemen answered, and I explained my entire situation. He said that he would foward the message, and take care of it.

That Monday, I was called by the corporate video managers office, and told that my check was ready to be picked up. When I arrived there, they said that they felt that it was very unprofessional that I contacted the Chairman of the Board of Citicorp, and that they would no longer need my services. The secretary had gone home, and the big boss answered the phone by himself.

But I got my money.

It's experiences like this that "harden" you, and make you cynical (and a smart ass like me).

bob Zelin

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Ron LindeboomRe: Why do the larger corporate clients take so long to pay?
by on Jul 10, 2009 at 8:26:33 pm

Yes, but in all seriousness, Bob, an account that never pays and merely piles up invoices in your accounts receivable department is as good as no account at all.

You didn't lose anything by going over their head to the Big Boss. I have had to do the same thing more than once in my life and I do not regret doing it, one bit.

I would call this one a victory, not a loss.

Ron Lindeboom

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grinner hesterRe: Why do the larger corporate clients take so long to pay?
by on Jul 10, 2009 at 3:14:27 pm

They, like your bank, enjoy collecting intrest on your money. It's why they pretend to be net 30 when they are net 90 and it's why your bank bags you in holding that check by pretending to have to hold it for a week to ensure it clears. Like you don't know this can be checked in real time.
In short, none of these companies go out of their way to be in the friend making business. And why should they? Our government is teaching them it is worth billions and far more profitable to fail.

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Mike CohenRe: Why do the larger corporate clients take so long to pay?
by on Jul 10, 2009 at 4:16:18 pm

I have found that the larger the organization, the more complex the systems are. One assumes larger organizations = efficiency.

However this usually means that approvals for spending money have to go up the chain of command, often with multiple signatures and approvals. Sometimes there is even an enterprise level IT system involved with approvals and payments, as opposed to just expecting the accounting department to blindly pay every invoice.

In other words efficiency is only efficient if it takes into account all parties. Paying every invoice that comes in quickly and without oversight may be most efficient to you, the vendor, but in order to comply the corporate accounting rules and regs, the payment is part of a larger process.

Often marketing budgets, which is where the money comes from for your invoice, also entail many other expenses. That money may be allocated annually or quarterly, and is based upon how much money was used vs available in the previous time period.

In other words, and not to defend or justify slow payments, there are often more things going on with slow payment besides foot dragging.

This is another reason why money up front should be the rule for any vendor. Don't be caught holding the bag.

You want to do a great job and meet your client's time line, which means the delivery date is before the day you get your final payment. You want to keep this customer (or maybe you don't!) so you tend to give them what they need when they need it.

Usually with a repeat customer, you will learn the nuances of their accounting department, so you know that 30 days to you = 90 days to them. Another reason to get paid in advance, as others have pointed out.

Mike Cohen

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denise quesnelRe: Why do the larger corporate clients take so long to pay?
by on Jul 10, 2009 at 7:37:19 pm

My advice is to try and balance out major clients with smaller ones. That way you don't get stuck with a massive amount owed while waiting to hear back from the big guy- you can do some work for the little guy and possibly get several projects done for him/her between the time you were waiting to be paid by the large company.

There is nothing worse than assuming you have thousands of dollars in your account when it takes months of waiting to deposit it. By doing some quick turn around projects this situation can be avoided, to an extent.

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grinner hesterRe: Why do the larger corporate clients take so long to pay?
by on Jul 11, 2009 at 12:55:14 am

Denise has unfolded the secret to getting around big business as we know it.
Avoid it.
The bigger the business, the worse the business dealings. I did not make this up. They go out of their way to be inefficient and slow paying.

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Ron LindeboomRe: Why do the larger corporate clients take so long to pay?
by on Jul 11, 2009 at 2:05:11 am

[denise quesnel] "...balance out major clients with smaller ones."

Great advice, Denise. Balance, meaning some on one side and some on the other to give balance.

We work with everyone from very small companies to very large international conglomerates. Yes, some of the biggest ones are the slowest paying but they do eventually pay and often they have budgets that the smaller companies simply cannot match.

While I would never want to be back in the situation that Bob Zelin alluded to wherein all your business is with one major company -- a recipe for disaster -- a balanced portfolio of clients is a great way to enjoy a solid cashflow of both smaller and major clients.

Best regards,

Ron Lindeboom

Creativity is a type of learning process where the teacher and pupil are located in the same individual.

Perfection is achieved, not when there is nothing more to add, but when there is nothing left to take away.
- Antoine de Saint Exupéry

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Franklin McMahonRe: Why do the larger corporate clients take so long to pay?
by on Jul 11, 2009 at 1:35:47 pm

People, and companies, have as much control as we give them.

Rethink your payment plan/system. Never think, well, my hands are tied. The more importance and focus you put on your payment system the more you will convey that to the companies.

This is your payment plan, not theirs. Run it your way. Get paid most or all upfront, switch to 7 day invoice, think outside the standard way of doing things. You'll get peers saying "umm..sorry..that's not the way the industry works...", what they are really saying is "hey..the industry controls me...I don't control the industry...". But don't be afraid to take a chance on change, you may be surprised with the results.

And remember, every time you point the finger at a "bad" company, there are often three fingers pointing back at you ;)


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Mark SuszkoRe: Why do the larger corporate clients take so long to pay?
by on Jul 11, 2009 at 6:23:34 pm

Sometimes it is really policy at the company to drag feet at every stage of a payment chain. Sometimes it is because humans are the chain. How it might work:

You deal with Alice the producer. Alice needs to submit paperwork to her supervisor Bob. Alice is very busy producing three projects at once plus being a working mom and wife, with all that's going on, she's about 4 days late submitting the form to Bob.

Bob lets it sit on his desk while he puts out some other fires around the office that are more pressing. In a couple of days Bob gets back to the bill, looks it over and signs off and sends to his supervisor, Charles.

Charles is out of the office on a vacation, 5-day golf weekend/training seminar, or whatever.

When Charles gets back in, Bob's signed-off memo is on the bottom of a stack of stuff from Charles' bosses. It takes another two days for Charles to get to Bob's memo and forward it to Accounting.

Accounting has two people in the office, Doreen and Danny, but one of them is out sick. Naturally, your bill goes to that one, Danny. Danny is out 6 days. Doreen *could* handle it if it was classified an emergency, but it is not. So it waits until Danny gets better.

A phone call from you comes in asking about the status of the payment. Alice calls Danny's desk but gets voice mail. She goes the extra mile and walks over to Accounting and asks Doreen what she knows about it. Doreen is a little bitter that she has to cover for Danny as well as for her regular work. But she digs out the form from Danny's desk, and sees that it has been sitting unpaid long enough that the calendar has turned into another fiscal month. What that means is, there were funds appropriated for that job last month, but because Danny didn't tap them in time, that fund is now closed and the process has to loop back to Bob.

Bob gets the paperwork back three days later because the mailroom clerk took a personal day for a family emergency. When he gets back, it takes another day to catch up to the piled up deliveries.

Bob re-submits the form to Charles for re-approval.

Charles gets it the next day but is confused: didn't he authorize this once already? He's not going to sign something until he's sure. He leaves it to his secretary to figure out because now he's off to a branch sales meeting in Omaha.

The secretary knows nothing about this, and it takes her a full day of talking to Bob, to Alice, to Doreen, to Tinker, to Evers, to Chance, molasses to rum to slaves.... and figures it all out around 4:30. On a Friday.

Monday the secretary sends the form out thru inter-office mail with an approval. Mondays always take the mailroom clerk longer, it gets to Accounting after lunch. Nobody opens it because they are at an extended lunch to celebrate Danny's return.

It goes to Danny, who is now back from sick leave. Danny has a huge pile of stuff to catch up on and works on the first-in-first-out basis, so the re-approved form the secretary signed for Charles is considered brand new, not over a month old. It goes to the bottom of his stack. Danny goes about his catch-up work, casting sullen glances at Doreen every now and then for not covering his job a little more. He watered her plants while she was on vacation, you'd think she'd reciprocate a little bit...

Danny gets to the form/bill late in the afternoon the next day. He is about to pay it, but there's a teeny discrepancy on the form with a transposed account number. Normally, he'd let it go, but he remembers the last time he got dinged by his supervisor for "sloppy work" and not being strict enough for procedure. So he walks the form back to Bob to fix and resubmit.

Bob is out supervising a field production with Alice today.

Bob sees the form the next day, yells at Alice for not filling in the blanks right the first time. Now Bob has to walk this back up to Charles, and it's going to look like Bob is sloppy. Bob is in the middle of lobbying Charles for a higher budget for his division, and this distraction is only going to weaken his position. Bob decides strategically it is better to sit on the form until the budget matter is settled.

Charles finally agrees to some of Bob's budget suggestions, noting there seems to be a slight surplus in the budget for some reason that should just about cover the new request. Must remember to ask Accounting about that...

Bob now waits a day longer for the glue to set on his new budget approval, then walks the form over to Charles for re-signature. Charles has his mind on other things, signs it without looking. Whew, dodged a bullet there, Bob. Next stop: Danny!

Danny takes the new form, scans it, nods, and fifteen little keystrokes later, the check is cut. Well, as far as the computer is concerned, it is. But the printer is out of blank check forms. Danny thought Doreen would have re-ordered in his absence. That witch. Just because they had coffee together once and he didn't want to continue it... Doreen says Danny has the seniority, and due to internal controls only he can handle that chore. But the good news is there's extra blanks in Charles' office, locked up.

No, you guessed wrong. Charles IS in his office. After a little speech to Danny and Doreen about teamwork and pulling together, he unlocks the safe and gets out the spare check blanks. We're back in business.

The computer is mad though; says it was already told to print this check once, it is not supposed to print a duplicate. Call Edward in IT to come fix this. Edward is offsite fixing something at the other branch across town. But if somebody okays the overtime, he'll rush back and fix it today. Otherwise it has to wait for Monday. Charles' memo last month about reducing overtime is still on the bulletin board so...

Sunday, Edward gets really hammered while having an all-day LAN party. He calls in sick Monday. But tells Freddie his assistant to go fix the printer in Accounting. Freddie has never worked with this system or printer before, it takes him all morning, but with help from Doreen, he gets it working. Freddie notices Doreen has the cutest smile he's seen in a long time, wonders if she's seeing somebody, maybe he can ask her out for coffee....

The check emerges from the printer, huzzah, amen. Off it goes to the mailroom.

The Mailroom super looks at his postage meter settings and notes they are running a little low on money, to stretch the budget till Friday, he orders the stuff to go second-class until then. But it is out the door, and into the hands of the United States Postal Service.

Six days later, Bob's plans are thwarted when the purchase order for a new piece of equipment is stopped because of an overdraft in his department's accounting line. Someone is going to get yelled at, when Charles gets back...

Charles sends a group email that he is leaving the company for another job, and the interim boss is Candace, who's first order is to freeze all projects currently underway until she can review them.

Fred and Doreen have gone on a second date, Doreen has a new haircut and Fred has re-configured his Myspace into a shrine to Doreen. Danny secretly keys the paint on Fred's car.

Oh, and you got paid today.

Tune in next week for another stirring story from "Tales of the Accounts Payable!"

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Nick GriffinRe: Why do the larger corporate clients take so long to pay?
by on Jul 11, 2009 at 9:12:32 pm

Damn, Mark! I used to like you. Gotta wonder how our relationship will be affected by the fact that you've now revealed that we're both working for the same client.

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Mike CohenRe: Why do the larger corporate clients take so long to pay?
by on Jul 11, 2009 at 10:28:25 pm

Mark - you are on a roll! Nice work.

I can see a Dilbert-style comic interpretation of this. Let me get to work on that.

Mike Cohen

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walter biscardiRe: Why do the larger corporate clients take so long to pay?
by on Jul 11, 2009 at 11:19:56 pm

[Michael Folorunsho] "Should I be demanding a more accurate time frame or exact date? Or should I just chill out and except that big companies drag their feet when it come to paying their videographers? "

This is what my contract states in part:

"All materials including, but not limited to, raw materials and Masters will not be released by Biscardi Creative Media until final payment is received."

I hold by that statement. If it's a product that's being delivered via web, I have a big watermark right down the middle of the video.

You'd be surprised how quickly the accounting / billing department of any company will be able to cut a check if they are not going to have that video presentation ready for the date. I've also had a few clients who didn't get their product on time because I didn't get the check.

It's in the contract when the client signs it so I hold by it.

Walter Biscardi, Jr.
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Credits include multiple Emmy, Telly, Aurora and Peabody Awards.
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