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What are your terms for payment?

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John Grote, Jr.
What are your terms for payment?
on Oct 6, 2010 at 2:22:58 am

Good day all,

I am a trying to find out what is reasonable terms for payment, net 15? Net 30? Net 45? Net 60?

Most of my smaller clients are better than net 30 with payment, but two of my larger (national/international companies) are net 60 or more? Is there any recourse to have them pay earlier. If I have net 30 on my invoice, what is the validity to that term?

Cheers,

John Grote, Jr.

J. Grote, Jr.


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Todd Terry
Re: What are your terms for payment?
on Oct 6, 2010 at 2:54:53 am

We bill net 30.

I know a lot of people here will advocate getting a portion as an advance payment, and then not releasing the production until the balance is paid. And that may indeed may be a good way to work.

However, almost all of our clients are established advertising agencies who have been with us a long long time... so we let them go net 30.

As for what can you do if a client is late? Well, you can impose late fees or "finance charges" or whatever... but only if that is stipulated in advance in their contract. You can try to collect a late fee if it is not stipulated... and you might get lucky and get it. But the client is under no obligation to pay it.

Usually the contract verbage is something like "Overdue invoices are subject to finance charges up to the maximum allowable by state law." Commonly you'll see finance charges of 2% a month, since in many states the maximum legal amount is 25% a year.

T2

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



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Bill Davis
Re: What are your terms for payment?
on Oct 6, 2010 at 5:06:42 am

While traditions like "net 30" are still very prevalent - I think things are getting less clear cut in billing.

You'll notice that currently American Experess's OPEN small business service is doing a big ad campaign aimed at small business about how their new billing help program can get someone "paid sooner."

I think it's a message ALL of us should embrace. Cash flow for small business, being KING anything one can do to make it easier to accept payment - particularly FAST payment is a good thing.

Personally, I've set up not just credit card acceptance, but PayPal billing and any other electronic payment gateway options possible as well. Yes, there are fees associated with some of this stuff. BUT - time IS money.

My invoices have been ROI for decades. Which means the balance is due on RECEIPT of INVOICE. Yes, many of my clients are setup to pay net 30 - and some take longer. But fewer and fewer as I try my best to train all my new accounts to use one of the electronic forms of payment.

The hardest thing to train yourself to do is when anyone ASKS about terms - to find a comfortable way to chuckle and say "NET NOW!. Then go on to offer all the IMMEDIATE pay alternatives, before you drop down to net-30 billing.

This also give you a chance to establish that if they pay NOW, you'll cut a few percent off the invoice in return.

Then make sure your rates support enough margin to allow the discounted rate to cover your expenses.

FWIW.

FCP since NAB 1999
creator: muti-track movies
http://www.starteditingnow.com


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Scott Sheriff
Re: What are your terms for payment?
on Oct 6, 2010 at 5:32:39 am

Not a big fan of net 30, my preference would be:
Know good client, small and medium jobs, net 15, large jobs 1/3rd down, balance net 15, balance on completion even better.

Unknown clients, or those with poor payment history. Small jobs, payment due on completion before work is released. Medium and large jobs, 1/3rd down, 1/3rd halfway through at a negotiated milestone, balance on completion before work is released.

Scott Sheriff
Director
SST Digital Media
http://www.sstdigitalmedia.com


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Mark Suszko
Re: What are your terms for payment?
on Oct 6, 2010 at 2:30:50 pm

With the very large companies, and large government operations, if you want to play ball, you play by their rules, or you don't play. That may mean net 90 these days. Even net 120. Sure, it is robbery, but only if you volunteer to be so robbed. Like any other negotiation, you don't have any power to change the situation if you're not willing to walk away from a bad deal at any time. I would always personally insist on a third down and the rest due on delivery, myself. I'm not a bank and I can't afford to be in the loan business, and that's what you're doing; loaning money at low or no interest to the clients, when you let them delay payment that long.

This is one reason small operators can't hang when dealing with big companies. A larger vendor has a cushion of cash reserves or bridging loans from a bank to live off of while they wait the 120 days. And if they are smart, they make that 120 days less painful by raising their rate to cover some of that waiting time and cost of waiting. So big outfits can bill bigger, because they can and must. The little guy can't afford that kind of game, unless he's got the resources or enough salesmanship to get them to agree to better terms.


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Bob Zelin
Re: What are your terms for payment?
on Oct 7, 2010 at 12:07:59 am

My terms are net 30, but I do not have one big client (and I mean large company, not good client) that pays in less than 60 days. The big boys take their time - don't like it - they will find someone else. Small companies with owners that you know pay pretty quickly. Big companies that have accounting departments take their time.

Bob Zelin



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Mark Suszko
Re: What are your terms for payment?
on Oct 7, 2010 at 2:19:43 pm

One little gimmick that sometimes helps is to check for a "prompt payment discount clause" in the client's billing info. For example, when contractors deal with Illinois government, the ones that submit invoices with a discount for early payment by law go to the top of the processing stack.

I have heard tales here in the COW of big-muscle client companies that claim the early pay discount automatically but ignore the actual delvery date anyway. I would assume that's tortable, but they count on you wanting/needing their business enough to let them get away with it.


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Rick Turners
Re: What are your terms for payment?
on Oct 8, 2010 at 2:27:42 am

I had a job recently,
half up front, half upon finish.
Done on a handshake.

First check was fine,

finished the job,

He cancelled the second check while overseas screening the finished film!! (and my bank charged me for his stopping payment)

Because he wanted to "change" a few things after screening the film.. now, because I mistakenly made the deal on a handshake, I feel I can do nothing but make his changes and hope he gives me the final payment without canceling the check he writes and running.

Im curious how someone else would handle this..


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Ronald Lindeboom
Re: What are your terms for payment?
on Oct 8, 2010 at 2:35:13 am

I'd tell the loser to bring cash. And before I'd edit the thing, I'd get my wife to take the money out of the building and go deposit it.

Oh, and I'd charge him a penalty for being such an idiot.

Some others might disagree.

No way in hell I'd do it for a check or a credit card -- which can be canceled in most states for at least 30 days, sometimes more.

Best regards,

Ronald Lindeboom
CEO, Creative COW LLC
Publisher, Creative COW Magazine

Creativity is a process wherein the student and the teacher are located in the same individual.

"Incompetence has never prevented me from plunging in with enthusiasm."
- Woody Allen


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Mick Haensler
Re: What are your terms for payment?
on Oct 12, 2010 at 1:36:30 pm

[Ronald Lindeboom] "h, and I'd charge him a penalty for being such an idiot."

We have an idiot clause in all of our contracts. It clearly states "If you are an idiot, and you know if you are or aren't, please add 10% to all payments."

Mick Haensler
Higher Ground Media


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Scott Sheriff
Re: What are your terms for payment?
on Oct 8, 2010 at 2:42:56 am

I had a job recently,
half up front, half upon finish.
Done on a handshake.

First check was fine,

finished the job,

He cancelled the second check while overseas screening the finished film!! (and my bank charged me for his stopping payment)

Because he wanted to "change" a few things after screening the film.. now, because I mistakenly made the deal on a handshake, I feel I can do nothing but make his changes and hope he gives me the final payment without canceling the check he writes and running.

Im curious how someone else would handle this..


I like what Ron said.
Or go watch 'Get Shorty' on some proactive client relation tips for deadbeats.

Scott Sheriff
Director
SST Digital Media
http://www.sstdigitalmedia.com


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Richard van den Boogaard
Re: What are your terms for payment?
on Oct 15, 2010 at 7:32:51 pm

Although a handshake is a perfectly acceptable way to do business, I always confirm things in writing and ask them to agree on this. That way, at least you have some form of legal proof. Without it, you have nothing.

This not only applies to the terms of your job, but also to the changes that need to be made to your edit, etc.

Richard van den Boogaard
Freelance cameraman • Glidecam Operator • Editor • YouTube expert


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walter biscardi
Re: What are your terms for payment?
on Oct 15, 2010 at 8:16:23 pm

[Richard van den Boogaard] "Although a handshake is a perfectly acceptable way to do business, I always confirm things in writing and ask them to agree on this. That way, at least you have some form of legal proof. Without it, you have nothing."

A handshake is absolutely NOT an acceptable way to do business any longer. It SHOULD be because I was always taught your word is your word, but I just finished a lengthy lawsuit that resulted from a handshake with someone I've known and trusted for about 6 years.

Gotta have EVERYTHING in written form and signed BEFORE you start any work. I just put a stop to a project two weeks ago when the potential client refused to sign a production contract. He said it was important to get the pilot finished and series funded first, then we would work out the details. Nope, not going to happen. I really don't need to sue anyone else that quickly.

As for the original question, my terms are Net 15.

Walter Biscardi, Jr.
Editor, Colorist, Director, Writer, Consultant, Author, Chef.
HD Post and Production
Biscardi Creative Media

"Foul Water, Fiery Serpent" Winner, Best Documentary, LA Reel Film Festival...

Blog Twitter Facebook


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Richard van den Boogaard
Re: What are your terms for payment?
on Oct 15, 2010 at 8:29:15 pm

Agreed. I was just saying that from a legal POV, a handshake suffices still. But is it smart? Hardly...

Get things in writing before starting your production is sound advice.

However, we should not forget that doing business is both contact AND contract. If you focus too much on the legalese you tend to loose sight of what it was you were trying to achieve together.

Richard van den Boogaard
Freelance cameraman • Glidecam Operator • Editor • YouTube expert


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Kashey Astra
Re: What are your terms for payment?
on Feb 20, 2016 at 8:57:25 am

It is for their help only merchant cash advance providing companies emerged on the scene. Their services are quick and best. Although they have high rate of interest even then small business owners are availing their services.


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Richard van den Boogaard
Re: What are your terms for payment?
on Oct 11, 2010 at 8:19:31 am

I use 14 days as payment term. I do this on purpose. Remember, YOU are the supplier, so YOU and only you set the payment terms.

If you do groceries, you can't expect to pay for it after 90 days without a penalty (e.g. paying interest on your credit card), so why should we be any different? Sometimes your clients say that they have to wait for their clients to pay - yeah, like that helps me when I have to pay off my mortgage!

Most of my clients actually pay within 30 days, if only because my online invoicing system starts sending them reminders when they're running late. For legal purposes it's always better to have the necessary correspondence if you ever need to get the money by other means (e.g. factoring company or even a lawyer).

Nonetheless, some of my clients state upfront that they can only pay after 60 or even 90 days ("It's company policy") and then I'll explain to them that the invoice will feature an interest charge (1% per month), with a complementary clause that they can deduct a comparable fee if they pay within my terms.

You may loose a client or two due to strict adherence to payment terms, but these are not necessarily the clients you deserve to work for anyway.

We provide services, but we're not banks!

Richard van den Boogaard
Freelance cameraman • Editor • YouTube specialist


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Todd Terry
Re: What are your terms for payment?
on Oct 11, 2010 at 2:22:44 pm

[Richard van den Boogaard] "I use 14 days as payment term. I do this on purpose. Remember, YOU are the supplier, so YOU and only you set the payment terms."

Yes, you can set the terms. But it's not always possible to get clients adhere to your policy. In fact, you say....

[Richard van den Boogaard] "Most of my clients actually pay within 30 days"

...so even though you set the terms at 14 days, sounds like few of your clients actually adhere to it.

None of us want to be the bank. But unfortunately in these times sometimes we have to be... a little. If we don't, the clients will simply go somewhere else. Especially with bigger corporations, you simply can't strongarm them into paying fast. If that's what you insist on, they will simply go somewhere else.

Even though I don't like to, I can "be the bank" for 30... but 60, 90, or 120... ummm no. We can't.

T2

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



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Richard van den Boogaard
Re: What are your terms for payment?
on Oct 15, 2010 at 7:25:11 pm

Hi Todd,

You misunderstood my strategy. I quote 14 days and usually get paid within 30, which is fine with me. However, once they're running late after that, I can point them to a longer overdue date than if I would have given them 30 to begin with. An invoice which is 45 days overdue makes more impact than one that's only 30 days late.

True, these days a lot of companies are stretching their cashflows. Some even go upto 90 days. I make a habit out of chasing them as soon as they're running late. Not only through my automated billing system, but also by calling them. They don't like that.

I still find it strange that some of you mention fear of clients going elsewhere. I am not afraid that clients will walk because of too stringent payment terms from my side. If and when they do solely for that reason, they're not the type of clients I want to work for, because then obviously I've not given them enough added value from the work I do for them.

Richard van den Boogaard
Freelance cameraman • Glidecam Operator • Editor • YouTube expert


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grinner hester
Re: What are your terms for payment?
on Oct 19, 2010 at 5:01:49 pm

net 30 is the national norm unless otherwise stipulated. I seldom stipulate anything. If I smell a rat, I flee before a hassle starts. If I am comfy, there is no reason to bring it up. I'm kind of simple like that. Does that mean some stretch it to net 60 or beyond? It does. Do I mind? naaaa. I've found it's the best way to save money.



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Andy Morin
Re: What are your terms for payment?
on Nov 16, 2010 at 3:33:31 pm

So after reading these posts I have a question. I recently did work for what seemed to be a legitimate client based out of New York. They've got a website up with a lot of projects and focusing on the well being of society, but for the past 45 days have been getting the run around with their HR department about 1099 forms and what not. Anywho, i'm now wishing i would have signed a contract prior to the production. so..

A. Does anyone have an example of a production form that best fit the terms of agreement

B. Is there a site where we can list clients that don't pay out?


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Mike Cohen
Re: What are your terms for payment?
on Nov 16, 2010 at 6:19:48 pm

[Andy Morin] "A. Does anyone have an example of a production form that best fit the terms of agreement

Statement of Work

What you will do
How much you are charging
Payment Terms
What is not included



B. Is there a site where we can list clients that don't pay out?"


Best not to air your dirty laundry in public.

Mike Cohen


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Greg Ball
Re: What are your terms for payment?
on Feb 22, 2016 at 10:11:40 pm

This is the reason why EVERY project needs a signed agreement. Also, for EVERY project, we require full payment before we send the client their video. Yes, if it's a large client that we do lots of work for, we have some flexibility. Most large companies have a way of paying invoices quickly.

I worked for major corporations for many years, and would always pay our freelancers immediately. We're not in the business of financing a company's video project.

So far we've never been stiffed on a project, and have not needed to chase down payment.

Greg Ball, President
Ball Media Innovations, Inc.
https://www.ballmediainnovations.com


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grinner hester
Re: What are your terms for payment?
on Mar 28, 2016 at 4:41:18 pm

30 day net.
I offer no monetary incentives for paying on time but do add late charges.
Now that said, I did have a client that was a full time gig for several years. They paid net 90 or more to collect interest on my money. Not very cool of em but it was a 300k a year contract and once the late checks made their rotation, I felt no burn as all the other late checks would follow. This is the only client I have made this exception for and it was non negotiable with them. Vendors either agreed or passed more work to me.



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Todd Terry
Re: What are your terms for payment?
on Mar 28, 2016 at 5:05:22 pm

Interesting that people suddenly started adding to an almost six-year old thread....

[grinner hester] "I offer no monetary incentives for paying on time but do add late charges."

All well and good, and while we haven't ever added late charges before, we have considered it.

BUT... be aware that you can't just do that at will. I think in most states in the US (if not every state), you may only impose a late fee or a finance charge if your original contract spells out that you do that, and what the details are. And then you are still bound by your state's laws as to the maximum allowable.

I got an invoice in from some voice talent last week, an actor we had never worked with before. I noticed at the bottom of his net/30 invoice that delinquent payments would be subject to an 8% monthly late fee.

Well, not that it matters to us (because we immediately paid him, as we do all talent), but he can't do that. There was never any discussion of late fees when we hired him, so he is not legally able to do that after the fact. Nor can he impose an 8% monthly late fee. That adds up to almost 100% annually, which is not legal in our state. Here, the max is 25% annually, or just a tad over 2% monthly.

Your mileage may vary, check your local laws. Your CPA should know.

T2

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



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