What’s on the iPod: Backwards Walk by Frightened Rabbit
I’m chipping away at these projects. I made some serious headway on the article due next Monday, and I managed a few client email blasts. Also, I sent over a brief assessment of a client editing project. I’ve already warned them I’m up to my neck in it this week. Hopefully, if we can come to an agreement, work can start next week.
Also had a call to a client whose project is woefully late in wrapping up. I get that we all have busy lives — I sure do. But it’s time to get changes sorted and get the bill paid.
That brings up an important point — when the client should pay. Every writer has a different system, and every writer at one time or another has an issue getting payment no matter the system. Here are some payment options. Which one you choose depends on what works best for you, and at what price point your clients are at. There are pros and cons to every method.
Thirty days from invoice date. It was my policy until recently to give clients the benefit of 30 days to get things through their accounting departments. Most accounting departments work on a 30-day cycle. However, waiting that long can mean you’re left without cash for a significant period.
Fifteen days from invoice date. Much better. It brings you well within a manageable time frame and gets your money to you faster. However, not all clients are able to pay that quickly (see above). Accounting departments often call the shots, as do clients who’d rather keep money in escrow building interest much longer.
Due upon receipt. If you accept electronic payments and work with clients who are used to paying that way, it’s instant gratification. However, there are fees associated with PayPal and other instant-payment portals, and with credit card payments. And I wouldn’t advise giving out your savings account routing number to too many people. I’ve never quite trusted that that is a safe way to get money from a client.
A portion due up front. Highly recommended because if your client is one who’s intent on stiffing you, you’ll at least get something for your troubles. Make it half if you can, and no less than one-third the total due. However, smaller projects and magazine gigs just aren’t worth it or aren’t going to accept that arrangement (magazines won’t usually).
Discounts for early payments. Want to get that money faster? Give them a percentage off their bill if they pay within 14 days. My local tax office offers a two-percent discount if I pay my taxes before August 31st. Why not apply that to your clients? However, you need to factor that discount into your earnings formula. If every client pays early, you’ll lose two percent of your income annually. Just make sure your discount is conducive to your earnings goals.
What are your payment terms?
9 responses to “Your Payment Terms”
You are so right that accounting has the control. The bottom line is contracts are ignored.
One of my best clients wanted me to invoice for two large projects before the end of last year to get it on her 2011 budget. I don't think she knows that accounting sat on it so it would go on this year's budget.
The games accounting pays. With another client, I can always tell when they want a bit of extra cash flow as they decide to hold onto payment some months-despite the terms.
In any event, I have never used the 30-day. I mostly work on large projects that can take 2-3 months for completion (no, I'm not working on them every day/all day, but they do take a lot of hours). I get 50 percent up front and bill the balance when I submit the copy. I have used payable upon receipt and variations of 10 or 15 days.
Another wrinkle is do you bill upon submittal of the first draft or after all of the edits? We ALL know how long that can take.
I worked an arrangement with a long-time client to invoice when I send the 1st draft. Their team literally could take a month or more to get all the edits collected.
Often it doesn't seem to matter what you put out there. Some of my clients pay right away and others drag their feet. I am considering adding late fees to those that drag their feet.
50% up front, 50% due upon receipt of completed project (with "completed" defined in contract), with anything after 30 days accruing a cumulative 20% late fee.
If my county offered a 2% discount for paying property taxes early, I'd be first in line!
Wade has a point – no matter what terms you state, some clients will still pay on their own schedule. Clients are like ordinary bill payers – when they're short they'll pay the bill that states how much the late fee is and when it goes into effect before they'll pay a bill with no consequences.
If you do the 15-day method, do you have a secret grace period? Kind of like when you give someone a drop dead deadline that's several days before the real deadline?
I'm mostly in Devon's camp… and it needs to all be defined as much as possible.
Cathy, I'm seeing some dragging of the feet in a current situation and I'm seething. Nothing I can do but attach late fees and halt all work. It ticks me off because it's a client I just gave a pass.
Re: billing on submittal or final drafts — I bill at a set date. Always. I've been caught in that vortex of too-many-edits-later-and-still-unpaid. Now I state in the contract a specific date, even if the project isn't done. It's just easier.
Wade, do it. You'll at least hurry them along. It may not net you any more (some refuse to pay late fees) but it will net you what you're due originally.
Devon, I'm glad to see your late fees are as deep as mine. I won't go ten percent because they simply keep ignoring the bill. Twenty percent works well.
And I totally agree about getting money up front.
Paula, I wouldn't be inclined to give a grace period. If you do, you set a precedent that's hard to argue should it go to small claims court. Stay consistent. Late fees at 15 days+.
Anne, I've found that I've had to define nearly everything, and mostly I learn it the hard way once.
I usually go for due on receipt,though I have one client on a 30 day cycle. He usually pushes it to 45 which drives me crazy, but he's been a client for 4 years, so I suffer it. I've tried billing early, sending reminders – they pay when they pay. I have less tolerance with other people. I take a 50% deposit for new clients; 100% for jobs under a certain value, and either payment on completion or, if it's a large job, staged payments.
Sharon, as long as you know and can budget for it, I'd put up with it, too. Not exactly the client you turn to for quick turnaround projects and payment I'd bet. 😉
How did you guess, Lori? 😉