Slow Approving Clients
Hi everyone, I always provide my clients with a detailed proposal and contract. We require a deposit up front that covers our costs, and the balance is due at the end, before delivery.
Recently I've had a few clients that seem to take forever to approve the video so we can finish the project, and bill them for the balance due. For me, that becomes a hardship as I end up working for nothing until they pay me.
I'd like to include something in my agreement saying that they have ___ days from the time they receive the first version of the edit to get back to me. Any ideas how to handle this? Do you guys add any stipulation like this in your agreements? Most of my clients are corporate clients, so it's difficult to get checks cut along the way as certain milestones.
Thanks very much for your help.
Most networks will specify in their contract "X" amount of days to deliberate on a cut. Typically this is from 2-4 days. If they do NOT get back to us with in that timeframe, then we have the right to request "overages" for the extra time we're waiting for them.
If you do NOT have language like this in your contract, then , as you've noticed, you end up working for free. The ONLY thing that will compel them to stay on schedule is either their own internal deadline (need it for a trade show, internal presentation, etc) or the contractual threat of having to pay overages.
I strongly suggest that you learn from this situation and NEVER fail to include language protecting you again! I understand that payment milestones may not be practical in every situation, but if you DID have them in your contract, then at the very least you can point to them and take the moral high ground.
I sympathize, Greg: I have a program that was finished in October, still waiting for sign-off. The trick, I know, is to erase all the files from my hard drives today, then I'll get an emergency priority change order tomorrow. At least, that project was pre-paid, so the only hassle involved is that it's clogging up my RAID until they sign off.
The RAID can be your excuse: that you're having to charge them "rent" for the project to stay active in your drives after x days without any action, or they have to buy the drive (actually, a replacement drive) for the archive. But that language would have had to be in the contract up front. You are not going to win, trying any charges like this after the fact.
Right now, they don't face any cost for being indecisive. Your next contract needs a carrot and/or stick to motivate a decision.
Thanks to both Marks. I appreciate your thoughts. Since I have detailed contracts for every job, I'm wondering what kind of statements I can include for future jobs. Mark S. yes I have a project shot in January and I gave them the rough cuts, so we can create scripts based on the shots. I'm still waiting.
Last year I had a client that took a year for approval.
I'm afraid charging them an additional $300 will not be enough motivation. Mark R, how can I use "overages" with a corporate client? What exactly are overages, and how would you explain that to a client?
I personally was thinking that I could say Client has 30 days to respond to the first draft of the video, or they must pay for the project in full. But I wonder how something like this will go over.
You described my life. I often start without up front money because I produce mainly for marketing departments that suddenly have a video need and they are running around with their hair on fire. They appreciate a vendor (I hate that word) who can run with the ball and save their ass. I equate it with taking the thorn out of the lion's paw and they appreciate it, creates loyalty. So I will often bill 2/3rds as my first invoice and they try to rush it through. I tend to give slack to local clients who I feel will represent repeat business. One-offs, entrepreneurs and out-of-towners I don't cut much slack. Hard costs such as airline tickets, out-of-pocket, studio rental, etc. those types of costs hurt and I want the money sooner rather than later if I can't get it up front. If there is no up front money I put hard costs on my lowest interest credit card to delay payment, never American Express. 90% of the time the job is starting so fast it's all verbal or a handshake. Many times the clients have felt obligated to rush payments through since I started without up front payment. It's a great technique to get 100% of the money while you're still doing post for them. It's all about trust. Maybe it's a Midwest thing?
However, when dealing with large companies and my client is "only mid-level", that's when the word Slow comes into play. We can only push our contact client so far against his Accounts Payable department because their hands are tied. Going up a DefCon level will cause animosity with the client. I try to live with that unless I have a feeling they will not pay at all, then it's hard ball. My editor(s) will work with me on that, meaning he will also wait for the last portion. I do pay my production peeps within 30, I tend to pay my own labor and profit with the last payment.
My largest producing client is America's largest bank. They are 90-120 days at the earliest due to byzantine paper work requirements, anti-fraud measures, etc. Their back office is actually farmed out to Mumbai (ugh). Been working for them for 20 years although recently they stopped doing videos. For this client my mantra to all (except the union talent) is, "I have good news and bad news. Good news: Got a great two day gig. Bad news: I will pay you when I get paid." Since I use the same peeps over and over through the years they go with it. I will pay young folks, renters, etc. out of my own pocket but the big check folks will wait with me. We build in a little extra for the aggravation. In sum: push your pay outs back if you think your client will be slow paying. Have crew and suppliers who will work with you on that.
The problem we all face is the definition of "Done" is squishy. I do a lot of work for non-profits and associations where everything has to be committee'd to death. The ones that know me, that trust me, they usually will get that last check pre-approved and in the pipeline before the Done phase so it's just missing the signature and a stamp. That's very important: Get your contact to do all the pre-approval. Don't have them wait for some honcho to say, "OK, done! I love it!" Then it could be another GD 30 days. I am in a unique situation because, besides producing, I am a freelance DP so smaller checks are always coming if to help my cash flow, so producing clients being somewhat late are not a threat unless it's a monster size job. I also counsel the young ones (who will listen) that two freelance creative services people can not survive together, one has to have a "steady job". I married a teacher.
As I look back on my 35 year career I remember many, many talented film & video people, more talented than I, who had to drop out of the biz because of the same reason: Intermittent Cash Flow. My mentor taught me that it's better to have many small and medium size clients than a couple of big ones. I equate it with hitting singles and doubles, maybe the occasional home run.
Last thought: The first indication of a No Payer is a Slow Payer, 100% of the time, meaning: headed for bankruptcy, merger, messy divorce, etc. Every time.
Can you tell by the length of this post I have nothing to do today?
Down payment to begin work due on signature of this contract (amount). No work will begin without the Down payment. Balance of (x amount) due on (calendar date), or on review and acceptance of the final version, whichever occurs first. After the (calendar date), a project maintenance charge of $300 per every 5 business days will be added to the invoice until full payment is made. Change orders and additions to the originally specified project will be billed separately, with a down payment and completion payment, and any such additional work does not commence until the original project's outstanding invoices are paid in full"
The lawyers probably wouldn't allow it , but you can try.
What's really happening here isn't that the client is indecisive, so much as that they are stalling for accounting reasons. Either this year's fiscal is short and they are stalling to get access to next year's funds, or something of that nature. They are making you their credit card and you're not even charging interest; you're letting them get away with it so why would they not continue such abuse indefinitely?
These clowns go on a list: all their future gigs must be pre-paid in full, up-front. And they get lowest priority versus the more responsible clients.
I know what some will say: "The client isn't going to agree to that; I'll lose the business."
I say: if you work and spend resources to create something, and don't get paid, you never HAD the business. They just GAVE you the business. Extending credit is a choice and a gamble.
"But 2/10 net 30 is standard procedure: they're not going to change that for my little business".
Then you can't afford to be in this business under those terms. Get a line of credit to even out the cash flow, or take up welding. It's not a huge secret that every large organization keeps some kind of discretionary spending account for urgent emergencies like calling in plumbers or electricians or the like. They may say they don't have a mechanism to pay up front, but what they mean is, they don't feel you're urgent enough to make the extra effort for a special arrangement. This is a game of Chicken: are you needy enough to knuckle under and accept their "standard" payment practices, in which case, they know they own you and can do as they please... or do they need you/want you badly enough to bend from standard procedure and pay up front?