September 17, 2012 
As any small business person knows, cash flow is the life-blood of your business. It doesn’t matter if you have thousands and thousands of dollars owed to you if you’re not collecting. This is a bane to the small business artist because most artists (me included) hate having to play the accounts payable police. It can be awkward and intimidating having to call up a client asking “Where’s the check?”
Spike Lee as Mookie from “Do the Right Thing” hounding Sal for his two-fifty. He gets two-fi’ty a week.
But the truth is, you have to get paid. You did the work. You deserve it. You don’t have to feel guilty or awkward about asking what’s owed you. With that said, there are some etiquette tips for invoicing and requesting payment that are worth noting. Here are some things I’ve either learned on my own and/or gleaned from others in my 10+ years in business. In no particular order:
- Establish the right contact. Make sure you have the right contact at your client for requesting invoices and payments. If you’re working with a larger company, it may be an individual from their accounting department. Especially if the main contact at your client is a creative or product manager type, get the A/P contact. Busy creatives don’t have paying bills at the top of their priority list. Establish up-front who may be the best person to contact to follow-up on invoices, etc.
- Know their system. Some companies (especially large ones) have very specific processes for paying their vendors. Venture one micron off that system and you may not get paid for months. These include, but aren’t necessarily limited to: having a purchase order (PO) and/or job number on your invoice; having an invoice number to give them; if your fee is broken into multiple payments, you may need a specific invoice for each payment; submitting your invoice in time to make the company’s check run; do they have certain invoice amounts that require a higher level of management to approve or sign (this is huge as submitting that full invoice for $5,000 vs. two invoices of $2,500 each could mean the difference of getting paid in two weeks vs. eight weeks).
- Set the stage. Make it clear up front what your payment terms are so you can go into the relationship with expectations correct.
- Make it easy. Make it easy for your clients to pay you. Some clients may be able to pay with a credit card. Give them that option. You can use Paypal to accept all major credit cards (no Paypal membership is needed by the payee). If you don’t want to eat the credit card transaction fee (usually around 3%), pass the fee on. For payments of $500 or more, we charge a 3% transaction fee when invoices are paid via credit card. They always have the option to pay via check to avoid the fee. At least 50% of the time, clients just pay the transaction fee.
- Follow up. Have a process to follow-up on invoices owed you. Maybe you send an email or two first. Then follow-up with a phone call. But do follow-up. Sometimes companies will purposefully sit on a check until you ask for it. They’re managing cash flow just like you. So, if you’re not asking, they may say, “Great. They obviously don’t need it right now. I’ll pay this other guy who keeps calling.” The squeaky wheel gets the oil.
- Be courteous and professional. It goes without saying, don’t be a jerk (e.g. “Yo. Where’s my money gee! Don’t have me come down there!”) I know you may WANT to say that, but hold your tongue. Always be overly courteous in all communication. We all agree money can be an awkward topic, so don’t make it more awkward with a poor attitude.
- Consider using a VA or bookkeeper. I know many of you are small businesses where you wear most, if not all of the hats. Consider hiring a virtual assistant or bookkeeper to help you collect funds. It alleviates you having to personally make those awkward calls or emails, and it also makes you come off more professional when you have a “department” that handles accounts receivable.
Do you have any tips you’ve learned over the years for getting paid on time?
Offer a good discount for payment in full in advance of the job’s start date.
That’s a good idea I frequently use as well. Thanks Steve.
Great tip. How good of a discount do you offer? 20%?
It depends on how big the fee. If it’s a really big fee, with a long production life, and the client is willing to pay it all up front, I’d be willing to go up as much as 10%. Imagine getting an $18,000 check all at once NOW on a $20,000 contract as opposed to getting five $4,000 checks ever other month for the next 10 months. That would be worth a 10% discount to me. But on average I’d say it lands around 5% when I offer one.
That makes sense, thanks Ron
Wow! Great post Ron. Collections is a sore topic for a lot of professional videographers. Here are some of my quick tips for getting paid faster:
1. Figure out who in the department you are working with is responsible for processing invoices. It’s usually not your point of contact. They’ll forward to a person in their department who then is responsible for getting the proper approval and sending it to the accounts payable department. Then, once you learn that information, open up a dialogue with that person and send your invoices to your point of contact and to the other person. Developing a relationship with the person who is only responsible for processing invoices will ensure you get paid much faster than just relying on project manager you worked with to get it submitted properly. They are crazy busy and the day your video project is completed, they are off to manage a dozen other projects.
2. When emailing or faxing your invoice, make sure you ask your clients to confirm receipt. If they confirm receipt via email, you can pull that up 31 days from now when they say that the reason you haven’t been paid yet is because you never sent the invoice. Trust me, it happens…a lot.
3. If your video is in the last level of approvals and it seems to be taking a while to get their final feedback, ask if you can go ahead and submit your invoice so it can start processing. Tell them that it’s okay if they don’t want to submit it until the video has received final approval but more often than not, they’ll go ahead and process it if you’ve built a great relationship.
Thanks Kris for the great follow up to my post.