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Deal Memo payment clause

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Scott Davis
Deal Memo payment clause
on May 27, 2010 at 7:43:42 pm

I am in the process of writing a deal memo. I will be working on an hourly basis and invoicing at the end of each week. I would like some sort of language that give a deadline for payment. In other words, "all payments must be received within 2 weeks of delivery of invoice". Or something to that effect. I assume I need some sort of penalty if this is not met. Right? Any thoughts on this? Or better yet examples.



Scott Davis
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David Roth Weiss
Re: Deal Memo payment clause
on May 27, 2010 at 7:47:51 pm

"Terms: Net 10" is shorthand for must be paid in 10-days.

Extrapolate from there... Some give a 1.5% discount if the bill is paid within the term as stated.

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

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EPK Colorist - UP IN THE AIR - nominated for six academy awards

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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Scott Davis
Re: Deal Memo payment clause
on May 27, 2010 at 7:51:37 pm

Thanks David, Is net 10 normal for the industry?

I found this in a pre witten deal memo on the internet. What do you think?

22. PAYMENT: Production services fees shall be paid to Contractor within 14 days after Company╩╝s receipt of Contractor╩╝s invoice. Pay date may be delayed by reason of an intervening federal or state holiday. Employee shall not receive any overtime, turnaround or other hourly payments. Paid work on a day off or a holiday must be approved in advance by Company and will be paid at the normal rate provided for by this Deal Memo.

Scott Davis
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David Roth Weiss
Re: Deal Memo payment clause
on May 27, 2010 at 8:24:10 pm

[Scott Davis] "Is net 10 normal for the industry?
"


I hate to say it Scott, but normal these days is 30, 60, or even 90 days. It doesn't hurt to ask for net 10, or net 14 days though.

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

POST-PRODUCTION WITHOUT THE USUAL INSANITY ™

EPK Colorist - UP IN THE AIR - nominated for six academy awards

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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Ron Lindeboom
Re: Deal Memo payment clause
on May 27, 2010 at 8:22:04 pm

[David Roth Weiss] "Some give a 1.5% discount if the bill is paid within the term as stated."

We quit doing this as the ones who ALWAYS deduct the 1.5% are the ones who are 120 days late.

We quit giving that in the 90s. In the 70s and 80s, it worked. In the 90s it began getting abused. Today, I wouldn't offer it even as an option.

What has your experience been, David? Does it work for you?

Ron Lindeboom


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David Roth Weiss
Re: Deal Memo payment clause
on May 27, 2010 at 8:27:49 pm

[Ron Lindeboom] "
What has your experience been, David? Does it work for you?"


I don't do it either Ron. It seems to work for some others here though.

My latest thing is try to get paid immediately via PayPal. Even though they take a hefty percentage, dollars in my hand today are worth a lot more than the promise of dollars in 30, 60, or 90 days.

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

POST-PRODUCTION WITHOUT THE USUAL INSANITY ™

EPK Colorist - UP IN THE AIR - nominated for six academy awards

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: Deal Memo payment clause
on May 27, 2010 at 9:14:42 pm

You want to see if the company or governemnt agency has a "prompt payment policy" in effect. In the case of Illinois, if you offer the state gub'mint a discount for prompt payment, they are legally bound to move your invoice to take advantage of that and go to the front of the line of people to get paid. If you want to get it sooner and not pretend at being somebody's bank, then the small discount could still be worth it under this kind of circumstance, I think.


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Steve Kownacki
Re: Deal Memo payment clause
on May 28, 2010 at 2:28:45 pm

In this day and age, take a hint from attorneys and this prior thread http://forums.creativecow.net/thread/17/870379.

Why not figure out what a weeks potential work may be and have them front you a retainer for services? You diligently track the hours and are then "committed to them" which can make them feel relieved that work will be completed. And like in the construction industry, at the end of each day you review the deliverables/products/services and both sign off on the time sheet. Then you invoice them at the end of the week and reduce their retainer account. When the account gets low, you get more fronted money.

Like the thread above - if you do everything professionally and treat this as business and not art, you'll be profitable and moreover HAPPY.



Steve



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grinner hester
Re: Deal Memo payment clause
on May 28, 2010 at 4:00:58 pm

30 day net is the norm and will be by most payers regardless if you want it in two weeks or not. Many add penalties after 30 days and some offer incentives to pay earlier with a little percentage break.
I don't. Getting paid later is the best way to save money around my house lol




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Todd Terry
Re: Deal Memo payment clause
on May 28, 2010 at 4:12:55 pm

To further that...

As mentioned, some people do discount billing such as 2/10 net 30 (again, meaning pay the net within 30, but if you pay within 10 days you may deduct 2%).

SOME companies (usually large corps and especially government entities) will go by the "2/10 net 30" rule even IF you don't bill that way. That is, some will take a 2% deduction when paying quickly, even if you don't offer it. I know of one colleague who took issue with the deduction only to have the client (a government office) basically counter with "That's the way we do it. So there."

As Grinner mentioned, you can impose penalties for late payment (call them "late fees" or whatever). However, if you want to do that, you MUST spell that out in the client's original contract BEFORE the job. You can't just decide to add late fees later. Well, you can, of course... but the client is under no obligation to pay them.

There was a poster quite a while back who was fed up with a late paying client and said he was going to start adding a monthly 10% late fee. Nice thought, and good for him if he got the money.... but the client wasn't obligated to pay it. Firstly, he hadn't told them in advance there would be late fees... and secondly, the amount was exorbitant. His late fees would have totaled 120% a year, far beyond what is legal in most states. He needed some upfront verbage in his original contract that said something like "Payments after 30 days are subject to late fees up to the maximum amount allowable by law." In many states, that max is 25% a year... so that's why you commonly see monthly late fees of 2%.


T2

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Todd Terry
Creative Director
Fantastic Plastic Entertainment, Inc.
fantasticplastic.com






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