I was wondering if you might do a bit on collecting from publishers and agencies that aren’t paying. I’m having this problem now and it’s looking like diplomacy is failing. What are the options for photographers when it comes to collections and legal action?
This seems like a timely question from one of my readers. I know things have changed drastically in the accounts payable department at magazines and advertising agencies, so I will let my readers answer this one. I will only say that legal action was fine by me because it gave me something to give to the CFO that would instantly expedite payment. Not sure if that’s still the case.
I recall tackling this subject several years ago and a photographer left a comment about a nice simple procedure for sending overdue invoices to collections. Lets hear what you got.
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One thing I always do first is to find out of the image is being used. Has it been published? If so, I contact the accounts payable and leave a very polite message regarding the past due payment. I remind them that since payment has not yet been received, the rights have not yet been transferred and they are in violation of the copyright. A check usually arrives within a few days.
@Norman Maslov, oh, i like this one!
I’ve barged into offices and demanded payment many times before when dealing with dirt rags. They don’t give a damn that they signed your T&C and if they go belly up don’t bother to take legal action.
What I found best is to add another line item in the form of a 10% Admin fee. I started doing this after going to the Strictly Business ASMP seminar with John Harrington.
I explain in my terms that the 10% can be deducted if they client pays within 30days of getting billed. So when clients pay they get a discount and when they don’t I get my late fee.
That worked out much better then hunting down shady publishers and make them pay in cash like I have in the past.
My method is simple. We have a policy not to release the photographs until payment has been made in full. It’s that simple. There are some exceptions though, such as syndication sales.
When letting the asset go, all leverage is lost, forcing complete mercy from the paying party. No thanks. I like my leverage.
Oh, and tell them up front in your estimate/agreement so there isn’t a nasty surprise when they’re going to press and you won’t give them the pictures because they can’t pay on time.
There is also John Harrington’s method. He recommends charging a 10% Administrative Fee with an “Early Payment Incentive” (discount of that fee).
As for collecting past due receivables with no leverage, the only answer might be a lawyer.
Watch out for small magazines that fold. I know a guy who shoots for a ton of these and he loses tens of thousands a year. Oops. BUT, he makes a lot in syndication sales because of these small celebrity jobs.
I would love to hear from and ex- accounts payable department person / or a currently employed one that would give us photographers insider tips on how to get paid in a timely manner….. any moles out there who want to divulge the inner workings and machinations of the accounts dept. ?
@jason florio, Former Art Buyer Moles here.
You have to call accounts receivable to make sure the invoice is even in accounting. If not then you know it is held up with the person who received the invoice. If you find it is in the system ask who the account payable person is and get transferred to them. Most companies have certain days when they release checks so ask what day your invoice is slated for payment. If you find that you aren’t getting anywhere with these folks, call the receptionist and ask who is the controller (their boss) and send an e-mail with a follow up phone call.
I take the same tack as Chris. I just finished a job with a client that I have never shot for and I stated up front that they would not receive the images until I was paid. I knew that were in a hurry for the images and were going to be sending them on to Copenhagen immediately so they were motivated to pay up. Of course they did their best to get me to post them on the FTP site prior to sending the check but I have had too many past situations where I felt I could trust them and they proved me wrong. I managed to have a courier at their offices to pick up the check just as I was posting the files.
Many clients are extremely interested in paying fast until they have the files in hand and then mysteriously they loose all motivation to do so. I don’t always insist on payment prior to turning over the files but certainly if I have never shot for them before I do. For me, clients have to earn my trust before they get it.
One more thing. I have been in the commercial advertising end of this biz for a long time and have for many years accepted the idea that they take 30 to 90 days (sometimes much longer) to pay. Perhaps it’s because I’m older now but I am much less willing to just go with the flow and take what they dish out. They want the images immediately and begin using them immediately and want to pay when it’s convenient for them. That amounts to an interest free loan to a much bigger company that than mine when, in this economy, I can’t get a loan to save my life if I need one. I know….a little soap-boxy. Sorry.
Obviously there is a difference here between editorial and advertising clients, Way back when I tried the early payment discount (10% or so), I found that some just took the discount and still paid you whenever they felt like it. It was more difficult getting that 10% back later.
I thought that might be a problem with that system too. However, if the amounts due are listed on the invoice for the job then it holds up in court and can be collected on quite easily (well, as easy as collecting can get anyway). Doing so will probably burn your bridge. Although, personally, I don’t need a bridge that goes to the dodgy end of town.
For example, say the shoot date was Jan 1st 2010:
If paid before Feb 1st 2010 = 100%
If paid after Mar 1st 2010 = 110%
If paid after July 1st 2010 = 150%
When your court day comes up and they still haven’t paid, you get to collect that pricey 150% of the invoice.
If it was listed on there and they agreed to it, then the terms are legally binding.
@Norman Maslov, We agree with you, agencies will not pay the 10% and for others talking about holding images before payment, that would not fly in the agency world as the money has to come from the client first before they can pay you and most large corporations wouldn’t release money without seeing the images they are paying for!!
@Suzanne and Amanda, I hear this a lot but why should the photographer have to wait for the client to pay the agency? I have had this said to me and I explain that my contract is with the “agency” not their client. The photographer has invoiced the agency not the agency’s client. If the agency’s client went bust the agency would still have to pay the photographer.
@Patrick Baldwin, The agency has to get the money from the client because if they paid you before getting the money from that client they would be paying you with another clients money and that could be a huge house of cards that could come tumbling down. If the account left an agency and they were still using your images, you would have to go after the account not the old agency for compensation. So while you are hired by the agency it on behalf of client (account)
@Suzanne and Amanda, I agree that this is the standard practice yet feel the pain of my colleagues as cash flow is the killer in my business. I wonder if it would not be better to then invoice the account directly, leaving the agency out of the equation.
On the editorial side, from my experience, it’s simple… They pay you when they want and they don’t pay late fees.
As with anything there are good clients and bad. I’ve had clients ask me for an invoice the day of the shoot because they wanted to pay me ASAP and I’ve had clients take a year to pay even after many invoices were sent (all late fees ignored of course).
On the editorial side, payment is pretty much at the whim of the magazine.
When working for commercial clients I haven’t had much luck getting paid before delivering images. But, I do register the images with the copyright office first and I include a clause in my estimates, contracts, and invoices which informs clients that no licensing rights are transferred until payment is made in full. That way, if they’re late and I have to take legal action I can make the case that they are infringing on my copyright if they published the images before I was paid. I haven’t ever had to sue anybody but if I ever do, I suspect I wouldn’t have any difficulty getting a good IP attorney to take an infringement case against a commercial client on contingency. Register, register, register!
Norman’s method is very tactful.
If it is commercial and the agency still have not paid – sending an overdue invoice with cover letter addressed (letterhead) to their client (ie: XYZ Toy Company) but sent to the accounts person at the agency can be effective.
One tactict I have found useful is to have an accounting person, real or not contact the guilty party. I do this by creating an email address for this person. So if your email is Joe@joephoto.com. You new accounting person is Jane@joephoto.com.
Email your contact as if you are Jane, joe’s new accounting person, and you are following up on the overdue invoice.
This defers some of the issues were the editor or art buyer gets annoyed (as wrong as that is) with the photographer as they are now dealing with the accounting person.
@Eeediddy,
I was pumping a successful recording studio owner on his business setup and he too used the accounting bad guy for invoices (“I would let it go, but you know how Jim Accountant is….”) It is a useful mechanism.
@Eeediddy, What do you do when a phone call comes? Voice changer?
@Chris Schultz, HA, never faced a phone call. I have found when someone owes you money they are happy to be vague on an email about when to expect the payment. Each time I have used this technique, the accounting person or photo contact responds professionally. I think something about being contacted by the “studio manager” or “accounting” person has some professionalism implied, and the reaction is in kind.
It would be nice if everybody who posts their experiences/recommendations here would also state which jurisdiction they live in. Thanks!
While I respect the efforts all of the photographers who have added clauses and fees to their agreements, the sad truth is that these measures often have limited or no success.
I have long wondered if a website allowing photographers to anonymously post information about their past-due accounts or bad experiences with specific clients. In theory, this could help to hold clients accountable. The site could also be moderated by a trusted individual. I know this may seem harsh, but photographers often have few other options.
@Jimmy, Someone attempted such a feat back in 2005 or 2006 located at http://www.photoblacklist.com. As you can see now, it’s a GoDaddy landing page.
Not sure what happened. I do know a lot of the people who got listed were offended and fought the site. Maybe they won?
@Chris Schultz, Freedom of speech is a beautiful thing, and so is the right to get paid for your work. I’d love to see another site like this.
Operating under the assumption that a client is trying to screw you if the invoice is +30 is a sure way to go from client to one-time job.
If it’s gotten so delinquent that you never want to work for the client again, then bring out the big guns. In 18+ years I’ve never been unpaid on an invoice. As a matter of fact I’ve got $12K outstanding as we speak. Do I want my money? Hell yes! Am I willing to risk a long-term relationship with 2 new clients on paperwork dynamics I am unfamiliar with? NO!
It sucks, I’ve got a mortgage payment due, the car insurance is coming up and I’ve got a deposit to make on next semesters college tuition. Listen, things are starting to get better. Folks are spending money. They may be getting a little ahead of accounts payable, but a good client will cough-it-up with some “nudging”.
Rob asked a question in the present. When money was flowing we were much more accommodating. Now that we are trying to get things back on track, the urge to get paid fast is strong. I suggest patience and persistence. Yes, you will have to deal with “those damn phone calls” for a little while longer, but the end result may be a new client who appreciates your willingness to work with them.
This is something I’ve struggled with for a long time, finding the balance of being a nice guy and getting paid. It can really mess with your finances when apayment comes in 6 months after the shoot. It’s not even the late payment that kills me for my rate it’s more the expenses I pile up for hotels and flying all over the place that can add up quickly. Expenses should be paid out ASAP. I was once owed over 8K by an agency that eventually folded. I was nice for so long just politely emailing every few weeks. That approach failed me for all that time and I only got paid after I threatened legal action. I probably wouldn’t have taken such drastic measures if the agency wasn’t going under but it worked.
The hard part from a photographers perspective is that you don’t want to whine to the editor and be that pain to work with guy but at the same time he/she is your only contact at the publication and I feel it’s their responsibility to facilitate the payment.
I find a lot of editors or my contacts with the NGO’s I work with always pull the sort of ” I’m with you, I feel your pain thing ” when in my opinion they should sit down together and figure out why things take so long. It should never take over 2 months to get paid and these days I’m surprised when I get paid within two months(a few publications excluded of course). I like companies like the the NYT that have an automated system where you can see what step your payment is in the process.
I’m speaking mainly of editorial assignment, commercial is typically on time because I don’t release my images until I get paid.
I’d love to hear an editors perspective or maybe even an accountant about this problem. Are the editors and accounting having discussions about this? It’s really poor business and a great topic for discussion, thanks for bringing this up.
Thanks,
Justin
I recently had a client give me the runaround for months on a smaller invoice. I have a list of things I do, calling, sending letters etc. The client gave me a check back in November that bounced, which he promised would be replaced. After a long dance of calls, letters and e-mails I filed papers in small claims court in New York a few weeks ago. The day my client got served he called to complain that I was being unreasonable. This from a guy who gave me a bad check, used the photos and didn’t pay for months. But having done this before I can tell you, once you have a good case in court, you are likely to win and recover the money. It takes time, but the system works.
Harrington’s 10% admin fee is just a simple version of a pretty standard finance tool. It’s usually known as “2 net 20”, or whatever numbers you wish to use.
“2 net 20” means that the payee can deduct 2% if they pay in 20 days. On the 21st day, the 2% discount evaporates. You could do any combination of discount/deadline you like (10% net 60, for example).
This is old-old-old-school business. It works better with established, long-term customers. Less likely to be effective if you’re doing retail photography, or working with a particular client only once or twice a year.
@Scott Hargis,
The formal term is “2/10 net 30” or net 20.
This means the buyer must pay within 30 days of the invoice date, but will receive a 2% discount if they pay within 10 days of the invoice date.
If I am not paid after 90 days or so, and can’t get any sort of response from the client, I file in small claims court. The limit is around $5,000 which is usually in the neighborhood for editorial work. It can be done online and hardly costs anything. I’ve had to do it three or four times in my career, and I have ALWAYS been paid immediately after doing it…. usually even with an apology from the client.
It would be nice if everybody who posts their experiences/recommendations here would also state which jurisdiction they live in. Unless (for example) “New York” comes up in your post nobody knows which jurisdiction you live in.
Regulations for small claims courts vary from country to country. For example, in the Republic of Ireland you can not chase an outstanding payment through the small claims court.
Interesting discussion, and i might be able to add my two cents: i’m a working photographer who at the moment is working as a photo editor as a three month project. Therefore, i can see both sides of the issue.
My thoughts on this issue are that a company that takes 90 days to pay a 1000 dollar invoice is not in a financially good position. The photographer who allows them to postpone the payment is alowing the client to use them as an interest-free bank.
I’ve seen photography budgets drop in the last year and cashflow problems being made the photographer’s problem. Believe me, the money was there, but why spend it when times are tight and people say yes to lower fees? The one thing i’ve learned, and i’m sorry to say this, is that we as photographers have only ourselves to blame. All it takes for clients to raise the budgets to fair levels and to pay us in time is for photographers to stop allowing clients to do it to them. If we collectively say no at certain moments the problem is solved in my opinion.
There is no easy answer. I learned the painful lesson that all the “proper” precautions still don’t always see you through.
You can find yourself in the position where I am now with
a client that owes me $2200 since Feb ’08. I have them on the ropes –
signed predelivery paperwork, print and web uses documented, registration with LOC prior to use, bombproof documentation of email correspondence with them saying that they will pay when they can. I used all this to engage the services of a prominent photo-centric IP attorney who after charging $450 to research the case and write a letter, essentially advised me that – “You can only squeeze so much blood out of a stone.”
The problem is that this client is very likely telling me the truth when they tell me that they simply do not have the funds and are barely staying afloat. Now I am stuck with no good options. Do I let them have more time and hope that they pay (which I am currently doing). Or do I pursue my full legal options and run them out of business and into bankruptcy where I am likely to never see anything? So indeed, it appears that you can only squeeze so much blood out of a stone.
The far more prudent action in my opinion is to simply avoid
notoriously bad clients from the get go or demand, like some here have said, prepayment before delivery of unwatermarked highres images.
@Shullphoto, you could:
a) Arrange payment in installments with them.
b) Yes, pursue your full legal options and run them out of business. You would do many photographers a favour by preventing them to get into the situation you are currently in.
This just happened the other day for a client that Amanda and I both work with. I researched the company as well as used my call sheet with all the names of the people involved in the shoot including the client name and contact info (Another reason why doing one is so important) and sent an e-mail to all the people on the call sheet, except the client, but put their name in the e-mail letter. And then I stated very diplomatically because I have found they hate this word “Images can not be used until final payment and we want to make sure you all are in compliant with that. Compliant is a word account people hate – they don’t like infringement because it put them in the defense. Needless to say I got an e-mail from the account executive saying she would look into right away. I copied the accounting person on the e-mail and stated that we had reached out to her 4 times without any response. I ended the e-mail with ” I will follow this e-mail up with a call” so they know you mean business.
I hope this helps!!!
You can’t seem to have a reality show without constant conflict and strong, opposing personalities who fight continuously. I wonder how much of this real and how much is playing to genre of reality television? Either way, I won’t be watching.
@Tom,
Sorry, I put this comment in the wrong thread. Not sure how that happened.
I realize I am in a different business, but will add my two cents here in case it helps.
I produce high end websites for clients, many of them big name agencies. We routinely produce custom designs, artwork, copy and images – all of which are covered by our copyright.
Our terms are very simple. We don’t move a finger without a 50% deposit for the work and 100% of the expenses (if any) covered up-front. Period, no exceptions.
Then, we deliver only a TEST URL (horrible for search engines) when we are done and we do not “turn on” the real website until full payment is received. If the client tries to “steal” the website from the TEST URL, they get gibberish code (also horrible for search engines.)
We have had a few instances (out of 500+ deals in the last 7 years) where an agency fails to pay in a timely basis and we’ve broken our own rule as a “favor” to someone. In those cases a simple “copyright” letter to the end client has solved it very fast.
I know, I know… different for a photographer, right?
Maybe.
But there is absolutely no reason for a client IMHO not to be willing to give you a deposit! I don’t care what the line of business. I’ve been in business for 20 years (doing web work for the last 10) and we “used to” do work for no money up-front… no more. For about the last 7 or 8 years, we ask for deposits and payments up front. Period. We ask firmly and early on so there are no surprises and we discuss our terms even on the first call with a prospect. Do we lose deals because of it? I’m sure we do… buy you know what? Those are deals I do not wan because there is absolutely ZERO reason for a client not to be willing to pay a deposit! If they are unwilling to pay a deposit, they are quite possibly also going to take their time to pay.
So, that takes care of 50% of your fees. For the rest I agree with the previous post about photographers needing to “stop letting clients do it to them.” Avoid the problem of collections all together.
Don’t even shoot without a deposit in hand. Heck, don’t even schedule the shoot until you have a deposit. Then, don’t deliver anything more than “proofs” without final payment. Discuss this on your FIRST call with the person requesting the work so they understand what it requires to work with you. Will you lose jobs? Absolutely… but do you really want a pain-in-the-ass-deadbeat-client that will stiff you for months or not pay at all? No, you don’t.
I might be naive as it relates to photography, but it has worked for me in web design and we have no shortage of business!
I’ve had mixed results in the past (one recent client that comes to mind didn’t pay for more than 90 days) – and I think I’m tempted to try the “Harrington method” from here on out – because (like John says), if they agree to it in the contract, they’re bound (or it can become a negotiating point for more up front, etc.)
*disclosure – I own a commercial credit/consulting firm*
Over the past 30 years, the two key element that I have observed in collection of monies is that agreements including your terms and conditions, must be in writing. The writing can be in whatever form, i.e. a delivery memo, engagement agreement, scope of services AND IT MUST BE SIGNED ( or acknowledged ) BY YOUR CLIENT. That writing delineates what ‘effective’ contract rights you have, IP considerations not withstanding. Your Terms should included interest, attorney’s fees and court costs. The second element is time. You should consider ‘third party action’ at 120 days, if not sooner.
I would add to #25 that this is why it is important to have a “forum clause” in your contract. You should have a clause where the client consents to the courts in your county/town/etc. This really helps you because it gives you the flexibility to sue them on your own turf, which makes it cheaper for you and your lawyer (and its one less thing you have to argue about).
I have never had to file a suit for late payment, but I have much greater confidence with my follow-up efforts knowing that if they give me a hard time, I just have to go down the street to get relief. I have had clients try to change the terms on me after the deal was done (them: we can’t pay you until you sign this new contract/ me: this is not true, go ahead and try not paying me), and I was confident holding my ground because I knew my options were good.
I work for a large magazine publishers in the UK. Sometimes invoices do go missing between editorial and accounts now and again. Or sometimes I make a mistake processing the invoice: put the wrong coding on etc.
Some photographers I use insist on payment upfront for picture sales which is a bit of a pain for me as our accounts dept will only pay via an invoice.
So usually I have to pay using my personal credit card, paypal etc and claim it as expenses.
Best practise for me is to send me an invoice with the 30 day payment terms and add that additional fees will be added if payment is not made within that term. And if no money is forthcoming within the due date, send another with an updated cost. Usually you’ll find it’s paid pretty quickly.
Also you’ll be surprised how many shooters don’t invoice me for months and months. Then complain when they don’t get paid.
Or leave their bank details off or incomplete or inaccurate.
So when you send in the hi res, send in the invoice with it.
This might be a happy medium:
Send FPO jpegs for editing and placement purposes. When you receive payment, send the high-resolution files. That way, the client can work on design, etc. but feels some pressure to pay for the job. Plus, they can’t go to print with the high-res work they haven’t paid for yet.
Here is a similar scenario, but from the other side. I work as a consultant for photographers, as well as a professional photographer myself. I recently fell pray to this problem as a photographer client, an ASMP member, has refused to pay and respond to my requests to be paid. They are 90+days overdue, and all tactics have proven to fail. Tried reminders, tried being kind and understanding as times are very hard here, tried reminding them of the repercussions of gone over 60 days, and threatened to take legal action, and still no reply. It’s a fair amount, and it shocks me that an ASMP member would fall into this category of dead beat. Although hard to not take this personally, it is an important lesson to ALL in the photo industry: business is business. I know I am preaching to the choir, but nearly EVERY OTHER business gets paid at time of service and delivery; why can we not be able to hold agencies, clients, magazines, etc to these perfectly normal standards and terms? Why are more and more slipping further and further into the hole, and still giving away everything in the process?
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