Past Due Accounts and Collections
[by Steve Whittaker]
Timely payments are important in any business. Your reputation and credit depends on being able to pay your assistants, employees, vendors, loan payments and any outstanding balances.
A clear contractual agreement on both sides in the beginning is important. Our terms require a 50% retainer in advance before assignment date. With the balance due, we allow net 10 days, past 30 days; a 1.5% late fee may be charged. One of the most important points in our terms that we adopted from ASMP includes: “License for usage will be authorized when payment in full is received”.
When I started using that combination of terms, our payments arrived in a timely manner with the majority of our clients. Some clients will try to take advantage of extending their payments, requesting discounts if they pay sooner and there is no reason for it. Advertising agencies and some corporate direct clients seem to fall into that category.
After the assignment is delivered, I follow up with a call or an email to the art buyer confirming that we met their needs. This is a great opportunity to ask if they have forwarded the invoice reflecting the final balance on to accounting. That confirmation is important. Many times that invoice will sit on their desk and that reminder works well. The email can act as part of a paper trail.
After 30 days, if we have not received the final balance, we send a letter and a copy of the invoice as a “friendly“ reminder. We follow up on 45 days with a phone call to the art buyer or accounts payable reminding them again and we email or fax copies of the invoice/s to reinforce the balance due with those copies.
If the client still has not paid after 60 days, additional letters, emails and calls continue. After 90 days, which is extremely rare we look at other options. One of which is advising the past due client that we might report them to a credit bureau as well as potentially taking further legal action. That is a last case scenario but so far we have been successful.
Getting paid is all about having a concise contract, signed by both parties with a clear understanding of those terms. It’s also about follow up, a paper trail and persistence.
