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Unpaid Invoices

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Aaron Cadieux
Unpaid Invoices
on Dec 10, 2009 at 4:19:26 pm

Hello,

Is anyone else out there having problems collecting money from clients? I have one client in particular with a $250.00 invoice that has gone unpaid for 6 1/2 months. I get the sob story about how his wife lost her job and how he doesn't have it right now, but then every day on Facebook, he is talking about his latest gig. $250.00 is not a bank breaking invoice, and even the poorest shlep should be able to pay that off in 6 1/2 months. As far as I'm concerned clients "not having it right now" doesn't fly. Don't hire someone to do work if you can't afford to pay them. Maybe I'm crazy, but as far as I'm concerned, invoices should be paid within two-weeks. I have since changed my policy and require 1/2 up front, but that policy is difficult to enforce when I'm doing freelance editing by the hour. If I were the cable company, or a cell phone provider, I wouldn't be getting this run-around.

What do you guys do to get your money? I hate to have to hound people about money, but I'm getting to the point where I have no choice. There's thousands of dollars at stake here.

Best,

Aaron



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Mark Suszko
Re: Unpaid Invoices
on Dec 10, 2009 at 5:01:51 pm

Offer to put him on a payment plan, ten bucks a week, five, anything just so there is a cash flow. Interest or late charges are up to you, but if you never specified up front, it's hard to justify them now and get away with them in small claims. And this amount is too small to be worth small claims, considering what your time away from working is worth. You do not do another thing for him until he's paid up, and you don't hand over any materials until he's paid up. And from here on out, everything is in writing, and you don't cave on payment terms or delvery terms for anybody, not even your mom.
You could possibly write him off on your taxes as a bad debt, but the accounting for that can be tricky. Consult a real accountant, or find the local SCORE office and run it by their advisor.


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Matt Townley
Re: Unpaid Invoices
on Dec 10, 2009 at 5:30:02 pm

It may not be the best business practice in the world, but I've come to accept that some clients will just always pay late, end of discussion. I can fight it all I want, but that's just life. So rather than spending time trying to collect on time and fight them, I focus on business and making more money.

Of course, there is the issue of cash flow, so I always make sure I have enough clients paying on time to keep a positive cash flow. Typically, it's my smaller, more local clients that pay on time. Big corporations are the worst, often taking 90+ days to pay, especially since many of them outsource their payables overseas.

I used to fight it and get worked up over late invoices, but as I've grown, I've learned not to fight it and save my energy and this works well for me now. I still send out monthly past due statements, but that's the extent of the effort I go to.

Matt

###
Matt Townley
MST Productions
[Media Services/Duplication/Replication]
http://www.mstproductions.com


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Brendan Coots
Re: Unpaid Invoices
on Dec 10, 2009 at 6:48:48 pm

No offense, but all you're doing is sending a loud and clear message that this is acceptable behavior. In the end, when you run your business that way, MY ability to collect is harmed as well because you've set a low benchmark for what is acceptable. Over time clients learn that our industry allows such chicanery and even come to expect it. Why, then, would they EVER pay on time if they knew it was okay not to?

If industry standard practice was payment on delivery, then no client would have the impression it was ok to delay billing 90 days. You could argue that you would have to pass on work if your policies were so strict, but you'd be wrong. Again, if it were standard practice, they would have no alternative, and no reason to even think such delays were allowed. We have created this billing reality by allowing it to happen.

This industry suffers heavily from a lack of uniform standards and practices. Such is the case with any industry run by people who are technicians first, businesspeople second.

For the record, I am not aiming this post at any one person. This is an issue that comes up almost every week here on the Cow, and it's clear that people are spending too much time being artists and not enough time being businesspeople. Until this dynamic changes a little, we will always be viewed as easy prey.

Brendan Coots

Splitvision Digital

http://www.splitvisiondigital.com


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David Roth Weiss
Re: Unpaid Invoices
on Dec 10, 2009 at 7:08:31 pm

[Matt Townley] "rather than spending time trying to collect on time and fight them, I focus on business and making more money. "

That's not altogether a bad idea.

[Matt Townley] "I used to fight it and get worked up over late invoices, but as I've grown, I've learned not to fight it and save my energy and this works well for me now. I still send out monthly past due statements, but that's the extent of the effort I go to. "

Probably not a great idea to post this strategy for the world to see all over the Internet Matt. Don't be surprised if every unscrupulous producer in your region comes knocking now that you're publicized that you're perfectly willing to do business without collecting for your time.

David Roth Weiss
Director/Editor
David Weiss Productions, Inc.
Los Angeles

POST-PRODUCTION WITHOUT THE USUAL INSANITY ™


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


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Matt Townley
Re: Unpaid Invoices
on Dec 10, 2009 at 7:31:09 pm

All fair points and well taken. Maybe it's time to change my policy a bit.




###
Matt Townley
MST Productions
[Media Services/Duplication/Replication]
http://www.mstproductions.com


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Brendan Coots
Re: Unpaid Invoices
on Dec 10, 2009 at 6:28:40 pm

This is an easy one to answer. Your contract should state that the entire unpaid balance is due before delivery of the final product. And yes, this works in conjunction with taking a 50% deposit. This way, they have money on the table they will not want to walk away from, and hence their willingness to pay at the end is much stronger. If for some reason the arrangement won't allow for this setup, you can provide a heavily watermarked version until they pay, but we NEVER give the goods without pay.

As soon as the client gets what they want, their interest in paying will always "taper off" to put it nicely.

Brendan Coots

Splitvision Digital

http://www.splitvisiondigital.com


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David Roth Weiss
Re: Unpaid Invoices
on Dec 10, 2009 at 7:12:10 pm

[Brendan Coots] "This is an easy one to answer. Your contract should state that the entire unpaid balance is due before delivery of the final product."

Absolutely, and even if there is no contract (not something I'm advising, just a simple fact of life), you can adopt this policy and enforce it.

David Roth Weiss
Director/Editor
David Weiss Productions, Inc.
Los Angeles

POST-PRODUCTION WITHOUT THE USUAL INSANITY ™


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


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Mark Suszko
Re: Unpaid Invoices
on Dec 10, 2009 at 9:11:55 pm

Not a lawyer, as my mom KEEPS REMINDING ME.... but one of the key concepts of an enforcable verbal or written contract is, you need to demonstrate that there was "consideration" paid. That some money, it doesn't have to be a lot, but SOME money was paid as part of the origination of the deal. If you can prove consideration, it is harder for the other guy to deny there WAS an agreement in the first place, he can't say later: "I was just idly talking out my, um, hat, I didn't actually promise you I'd do so-and-so.".

This is why people sell a car "for one dollar" when transferring it between friends or family, and this is why you should always get some token amount as a down payment, with reciepts or traceable cancelled check, etc. when you make a deal that may have to have some unknowns in it.


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grinner hester
Re: Unpaid Invoices
on Dec 10, 2009 at 11:32:46 pm

[Aaron Cadieux] "What do you guys do to get your money?"

I'd go get my money.



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David Jackel
Re: Unpaid Invoices
on Dec 11, 2009 at 1:07:41 am

I've dealt with this a bit - just posted about a problem client I have now.

I think the best solution with late invoices depends on how much you value the client. There are some clients who habitually pay late, but always pay, and pay enough to make it worth your while. Then there are clients who avoid paying as long as possible, because they have a perennial cash flow problem. And then there are the clients who never intend to pay at all.

If you value the client, I recommend frequent gentle reminders to pay, and declining new projects until they've cleared their debt with you.

If you don't value the client anymore, be aggressive. Constant phone calls and emails can be effective over time. If you're not dealing with the top person in the company, then call and email your contact's superior.

I'm dealing with a client who has gotten progressively worse, and I've tried all of the above. I'm still getting no response, which means my next step is likely small claims court.

As someone else mentioned, the best approach in the future is 1/2 up front, 1/2 before (not upon) delivery.


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Arnie Schlissel
Re: Unpaid Invoices
on Dec 11, 2009 at 6:03:18 am

[Aaron Cadieux] "I get the sob story about how his wife lost her job and how he doesn't have it right now, but then every day on Facebook, he is talking about his latest gig"

Perhaps you could respond to his daily post about your overdue invoice? That might get some traction...

Arnie

Post production is not an afterthought!
http://www.arniepix.com/


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