Art of the Invoice
Updated: Dec 17, 2020
building a repeatable process to earn trust
entry no. 21
As creatives, I think we've all felt anxiety or burned attempting collecting payments from clients. It's easy to complain and blame the client, but what if we're in our own way? Prepare for a very dry, non-creative discussion, but I think it contains tons of value. It's time collecting payments works for us instead of against us.
The reality is most creatives are wired to create, and collecting payment is far from that headspace, some of us (ourselves included) hate even talking or asking about money. I believe part of the problem is the lack of simplicity and creating processes that make it easier for the client.
We're going to share our system and a few strategies that helped us over the years. In doing this, it's taken us from closing the year with several thousands of dollars in uncollected payments to our first year of 100% collected. Keep in mind what works for one may not work for another. We feel this advice may be helpful for those who feel lost or looking for alternative options.
When we face any challenge, we look for a simple solution. A good exercise is putting yourself in the client's shoes. Why are they avoiding payments? How will they pay? Can the payment be flexible?
In the early years, we played the victim or felt awkward, inquiring about collecting payment. The reality? We didn't set up precise dates, deadlines, and educate clients on why it was necessary to hit those deadlines. Explaining why deadlines are essential is a simple conversation. We need payroll, project expenses, company expenses and to secure all assets around your project. There's also the more critical aspect, the mental state. The action of a client paying signals that the project is real, the contract is signed, and we can move from the idea phase to existence, creating the plan.
Creating concrete terms makes the conversation natural and repeatable. We break each project down by 25/50/25, meaning that on signing 25% needs to be paid for us to set a date, and move into pre-production. An additional 50% is due two weeks before production so we can secure crew, location, rental, props, talent, or any other associated cost of the project. The last 25% is due on a net 30 after the production date. In the past, we've also done payment plans, full payment, 50/50, etc. but this has been the most flexible for the client and us. It's a comfortable balance working through each phase of a project keeping all parties motivated to completion.
SYSTEMS WITH FLEXIBILITY
Make it easy to pay you. Choosing the way we sent invoices and collected payment was the most crucial modification we made. We use PayPal invoicing for a few reasons. The shareability of their invoices is top of all. Usually, a band is paying us, and they all have different PayPal's. This lets them pay us quickly. Our terms also allow for smaller portions to be made, which simplifies a group pooling their funds together. It's incredibly flexible, and PayPal tracks everything automatically for both parties. The last reason we love it is the payment types accepted. Our artists can pay with PayPal, use a credit card, or even apply for PayPal financing if they choose. This has created more flexibility for our artists than anything else. A bonus is the reminder function, which takes some of the worry away from bothering someone for money.
Taking things a step further in clarity, we've found another easy way to set expectations and remove any chance of them forgetting payment. We love using Google calendar for meetings, production dates, and also an automation system for payments. This keeps us organized and our clients, eliminating all excuses and speeding up communication. After we set the terms and dates on the invoice, we copy the invoice link and embed it into all three calendar invites on the associated dates, automating reminders, so Google does all the work for you.
Collecting payment has been about eliminating any excuses, simplifying it, creating flexibility, and building a repeatable process. Most times, our clients appreciate this, and when things are missed, one of two things happens; We get an apology or explanation as to why or find that our client didn't respect our process, which is a good indicator for if we choose to work with them again.
This is our art of the invoicing. It's taken us years of improvement, considering other perspectives and being open to feedback. Right now, it's working great, and we're sure we'll pick up new ideas along the way too!
These tips can be applied if you're a large team or small. Even if it's dipping your toes one project at a time, we think this is these are helpful. The best part about these is you'll see the value each time and be able to refine your approach project after project. To help get you started, we've created a downloadable document available here. Download it and tell us how it works on your next project.
Use the Promo Code: TCP for 50% off
#teamculture #clientalignment #ohiohd #kinoflo #leadership #relationship #preproduction #planning #producerlife