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December 23, 2011 at 8:38 PM #43356madpainterParticipant
I am gradually entering the video production business with a colleague and
we have run into a situation that I am hoping someone could help with. My
question is how does one set up a payment schedule for a company or institution
that disburses payments on a 30 or 60 day net schedule. All the research
I have done so far says to clearly specify a payment schedule with the final
payment from the client due upon receipt of the final video. Some people
even advise to withhold the final product until the last payment is in actually
hand. This seems like it would work OK for smaller companies.
The problem we recently ran into involved a gig for a public school.
My partner set up the gig so I wasn’t in on the contract negotiation.
However, the school makes payments to contractors through the main district office
which is on a 30-day net schedule. The gig was a rush job with a two week
turnaround. So this ended up with us
doing the entire gig, beginning to final delivery without getting paid
yet. Im not worried about not getting
paid, our money is working its way through the system and is expected just after the new year. I just wonder if this is par for the
course? What useful advice is there for
dealing with large bureaucracies where payments may be delayedespecially when
a project is on a tight schedule.
Thanks for your advice.
December 23, 2011 at 10:39 PM #181927CharlesParticipant
Larry, usually with large companies and government agencies it is normal for them to pay on that schedule and as long as the company is reputable it is like money in the bank. These type of gigs are usually better paying but you will have to wait for the money.
December 24, 2011 at 1:12 AM #181928JackWolcottParticipant
I’ll have to agree with Charles. We’re past 60 days waiting with work we did for an international construction company, and still waiting. We did work for a Japanese company with U.S. offices and waited nearly 6 months before getting paid, so it’s not uncommon. The big companies (almost) always pay, though.
One thing you may be able to do with the large companies is set up a payment schedule that coincides with the schedule their union and administrative employees are on — say every two weeks, etc. If you submit this in your proposal and it’s written in to the final contract it will happen on time. The details of the contract are all important; we often involve our attorney before finalizing the contract.
With smaller companies we structure our contracts so that we get paid upon completion of the shoot and again at the completion of the edit. This way, even if the client should decide not to follow through with the project — which happens from time to time — you’ve been paid for the work you’ve done. We make it clear that we expect a check in hand at the conclusion of shooting.
And in almost all cases, never ever give up the finished product without money in hand unless, of course, it’s a large company and you’ve got an airtight contract. If the client insists on showing the work around his company for approval before you’re paid, watermark it conspicuously.
December 24, 2011 at 9:27 AM #181929composite1Member
Whether small or large, as a small business you can’t afford to wait ‘six months’ to be paid no matter how reputable the client. When you submit your contract proposal, put in language that lines out the time frame for payment of completed work. One method that has worked well for me is to setup progress meetings where your client principals (preferably dept. heads) are shown the project’s progress. 2-3 meetings depending on how production savvy they are to show them the cut stages and to allow them direct input concerning changes or potential additions. Each time when changes are approved have them sign off on the meeting and authorize the next stage. Then, send them an invoice for the work done up to that point. When production is completed, you send an invoice. So by the time they screen the final cut, they’ve already made partial payments so it’s not a major wallop of a check they have to write to get the finished product.
Now, that’s hard to do when you work on government contracts because they write all the rules and with them, you’ll get paid when you get paid. Whenever that may be. Charles and Jack are right about really big outfits. I did a gig for Viacom and sent them an invoice for the completed work. In the invoice it clearly stated for payment being due 30-days after delivery of the final product. They got bent when my account specialist sent them notices two and one week prior to the 30-day deadline. They really flipped when a week after, we started sending late notices. All because they usually pay when they get around to it. Not knocking them and other large outfits, but if a small outfit pulled that, they’d be deluged with collection notices. Ultimately, we lost their business but they paid in full two weeks after deadline. Oh and forget about trying to get late fees unless you have a lawyer and a collection agency capable of getting it!
December 24, 2011 at 7:51 PM #181930Moab ManParticipant
Having done work for a school, it’s just the nature of the beast and I accept it is what it is when doing work for a school.
December 25, 2011 at 4:41 AM #181931madpainterParticipant
Thank you for your responses. It is all very helpful info. So it sounds like the consensus is to do my darnedest to get the company or institution to pay promptly, but be aware that some larger ones just won’t do it. In those cases, plan ahead for late payments. Thanks again and happy holidays to all.
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