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Interest Rate for Late Payments


RyAgs

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For the future: bury it in boiler plate in your "standard" production agreement, deal memo, session completion form, deliverables spec, or whatever else you get them to agree to. If it's in smaller type and looks like it's part of stuff your lawyer made you put in or you copied from the internet, people won't question it. 

That being said, you'll have a hard time collecting anyway. I've always found that an interest charge (coupled with a discount for very prompt payment) just helps make sure I get paid quickly. But if it's a client I've got a good relationship with, and they occasionally go to 60 or longer, I'm not going to make a fuss.

The other thing that can help is a 'boilerplate' disclaimer about ownership in your contribution remaining yours until the agreed amount is paid. That can help a lot, with recalcitrant payers, when you let them know that you'll have to advise their client that there's a copyright issue. (They'll never call you again, but you were ready to drop them anyway, no?)

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I agree that you'll probably have a hard time collecting, whatever it is. 

I also think that going after someone for an interest fee on a late payment is a quick way to lose a client. 

Sometimes it's worth it - if it's a client you don't care to work for anymore anyway then go for everything you can get. But if it's a client whom you have a good relationship with and whom you see yourself working with again in the future, going after someone for this will lead to some hurt feelings at the least. 

-Mike

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There's some good basic info in this article by a lawyer from Nolo.com, a great resource for small business (and other) legal issues:

Get Clients to Pay Up

What to do if a client won't pay.

http://www.nolo.com/legal-encyclopedia/get-clients-pay-up-29988.html

The article's not long, so be sure to get to the "When to Give Up" section.

Good luck!

Jim

PS- at the end he recommends a book he wrote, "Working for Yourself: Law & Taxes for Independent Contractors, Freelancers & Consultants." That's a good book, imo.

 

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As soon as I know it's a new client from far away,  potentially strange, or, a new client from around town, I will always ask for a location check for after the show wraps... Can't hurt to ask, it works about 80% of the time I'd say...  Once you get to know them , all good... but until then, I say..cut the losses before they begin.. 

  This is not to say you never hear the " I wrote the last location check to who knows who..." but, it seems to work out most of the time. 

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Do the math. Let's say your invoice is $2000, and you charge a nominal 1% per month, you're looking at $20. They won't pay it anyway, so it hardly seems worth the trouble. If they're deadbeat clients, you'll be lucky to get the money to begin with.

My contract reads 1% per week interest for invoices past due. It doesn't seem much when you look at 1%, but it is. Fortunately I have never had to enforce it, and I'd imagine I would have trouble doing so, but nobody has ever said, "Wow! 1% per week!?"

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I set my invoicing software to add 2% monthly after 30 days. Most clients don't pay it, but I think it can be a good part of your business image; you run a tight ship.

Agreed that you're not going to go after anyone (that you like) for that money.

But ain't it funny that the phone company charges you dinky fees like this and everyone pays them...

A

 

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3 hours ago, Adam White said:

I set my invoicing software to add 2% monthly after 30 days. Most clients don't pay it, but I think it can be a good part of your business image; you run a tight ship.

Agreed that you're not going to go after anyone (that you like) for that money.

But ain't it funny that the phone company charges you dinky fees like this and everyone pays them...

A

 

That's because the phone company has clout. Don't pay your bill on time and they shut it off. It's good to be the only game in town.

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On ‎12‎/‎10‎/‎2016 at 11:44 PM, mikewest said:

Depends upon you client

Are they regular / is it a one off / do you like them ?

Why not phone them?

mike

Good advise!

At the risk of stating the obvious, don't let a late payment of a few weeks or even a couple months jeopardize a relationship with an otherwise good client.  From my experience, if you try to inforce a late payment fee, you will probably never work for them again.  If that's okay with you, go ahead, do it!  

I have one particular client, a small independent producer who typically takes 2 months or more to pay.  But they otherwise treat me well, are extremely pleasant to work with, and generally just "likeable".  They always pay, it's just their particular client is slow paying them, so payment to me is likewise slow.  Yes, they probably should run there business differently and get money up front, but not all their clients (especially corporate clients) are willing to put up much front money.

Because I have a good relationship with this client, I can call them anytime and in a very friendly manor simply ask if they have received payment and when they might be able to send me a check and, best they can, they will tell me.  On a rare occasion, it turns out they simply failed to print up my invoice and as a result forgot they owed me money.  Again, we could argue how they should run their business, but provided they are honest and descent people I can accept a few managerial flaws.

Personally, for me and my clients, it's as much or more about the "relationship" as it is the money.

Tom

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When dealing with many companies, having a penalty rate in the contract (repeated on the invoice) and a discount of 5% for speedy payment often triggers a mandatory speedy payment to you.  The government of our state (GA) and the accounting rules for subcontractors to that state enforce their taking advantage of any discount of 5%.   Many companies mirror this required practice.  And it can make a "net Whenever" client into a "net 10 day" client.

Make sure your base rate reflects a high enough fee to have this be worth your while.

If I have to request a late fee at 60 days or later, I want to fire that client anyway, and I will try to collect the late fee.

 

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  • 2 weeks later...

In the few cases where it went past 60 days I had to remind clients that the business arrangement was "work for hire" and that that what was produced belongs to me until it is paid for. I believe this is true in most states and usually gets attention. On one occasion I had to call the stations airing the spots and inform them that they had to stop until I got paid. I got paid. Goodbye client, fine with me. 

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But ain't it funny that the phone company charges you dinky fees like this and everyone pays them...
A
 


The phone company can cut off your service.

Can we come up with digital files that require a key to decrypt?

Imagine: dialogue box comes up in Premiere: "Audio Mixer payment has not been made within 30 days. Please remit payment to regain access to the files."

Sent from my XT1080 using Tapatalk

And this stuff about don't bug them too much for the money they promised you, who's responsibility is it to uphold the relationship? What crap.

Good thing they are requiring contracts for all freelance work in NYC now. Let's get payment language into them. This is business, we shouldn't be going around groveling for money we are owed for work done months ago.

Sent from my XT1080 using Tapatalk

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On 1/2/2017 at 7:43 PM, mulluysavage said:

The phone company can cut off your service.

Can we come up with digital files that require a key to decrypt?

Imagine: dialogue box comes up in Premiere: "Audio Mixer payment has not been made within 30 days. Please remit payment to regain access to the files."

 

 

Things change in the world of digital delivery and software. In just the past few years we have seen the infiltration of cloud subscription services where you have no choice in the matter with people now being conditioned into paying 3 to 4 times the amount they used to for software that has been mature for well over a decade or at the very least being put into a situation where they are paying yearly for something that would have been a one off payment. People are downloading/pirating less music now that they can stream an all-you-can-eat buffet of music for 10 bucks a month. Habits and views can change and change quickly.

If you think about it, most people who are creative professionals that have been doing this before the "digital era" presume that the creator of the material retains copyright automatically but the reality is, at least from my perspective is, that has been seen as debatable since 1995, about the time that mp3s started circulating and the web began.

I think this idea of a key to decrypt creative content is worthy of consideration at least as a starting point for discussion. Should not creatives get the same kind of assurance of payment that software developers get or anyone else who is a business person in the digital world? Halting production with encryption may be extreme but most businesses that deliver digital content require payment before activation of the content occurs.

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What kind of percentage of late or non-payments do you all have on average in a year? In my case it's maybe one or maximum two per year and it's always the one-day jobs. Everyone else usually pays within 2-3 weeks, with the exception on commercial jobs where they always need 6-8 weeks. But I don't do a lot of those and I am used to it.
But encrypting the files with the result that they will suddenly not be playable seems far too drastic to me. Besides, it'll be very difficult to implement, with ProTools (eg) creating copies all the time.

If you can't get them to pay after a month or so, send them a few reminders, call them, then get a lawyer on it. Or accept the loss, put the client on your blacklist (which you will share with colleagues), and move on

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