Three Considerations on Dealing with Growing Payment Cycles

On a writers' board, someone brought up the topic of clients that are trying to unilaterally stretch their payment schedules from 30 days to 45 or more. There should be two concerns when that happens. One is that we're in some times when certain types of clients - print publications, for example - are feeling a revenue pinch. Generally when a client, particularly a smaller one, starts paying later and later, it's a sign of economic troubles.

There's another factor at work as well. Remember that the commercial credit crisis hasn't suddenly stopped. One result is that many businesses, including large ones, don't have access to their usual amounts of credit, which is the lubricant for all sorts of business transactions. When things get tight on the lending side, you can find some of these larger clients choosing a different form of financing - late payment to vendors - that they think they can control.

Whatever the case, you want to consider your various options and what steps might be best for you in the short and long runs:

• Hit the 'Chutes If you have any sense that the company is in financial trouble, drop the client immediately. Usually I'm an advocate for phasing out clients over time and not dropping one until you have a replacement. However, if there are economic problems, the chances are overwhelming that they will continue to be bad. I'm not suggesting that you be rude or panicked. You can excuse yourself by blaming your schedule or simply stop pitching ideas. If you do not take action quickly, you can find yourself with thousands being owed money that you may never see. Generally speaking, making a break and doing intensive marketing is a less costly solution.
• Recalculate Client Viability Just as I think it's good to limit the total amount of business that any one client represents of your normal billing activity, I also think it's good to limit what is tied up in long payers - and to make sure that you're getting something from it in terms of higher rates. If it's more waiting for no more money, then it's time to recalculate the client's profitability and PIA factors and consider whether a replacement might not make sense.
• Get Something in Return The client wants you to give in on something. That means you're in a negotiation and should consider if there is something you could get in return to make things acceptable. Maybe you should increase your rates to cover the few percent that you lose in the time value of money (what borrowing that amount of money for a month or two might cost). Perhaps you should have late fees or, even better, a slight discount for accounts paid within a short amount of time. If you regularly do business, perhaps you could get a retainer relationship, with a certain amount of money guaranteed every month. Perhaps you'd get a greater share of more valuable assignments. Figure out what might make things desirable from your end (so long as you don't think the client's economic ship is taking on water).

Even if you find things slowing down, you can weather the storm and even arrange your business to eliminate the disruption of those checks hitting your mailbox.

Mediabisto Gives Heads Up Over Ad

About a week ago, Mediabistro ran an advertisement for OverTime Magazine, which was seeking "Excellent Freelance Writers." But according to an article that MB ran today, the publication is in deep hoch:

According to interviews conducted by mediabistro.com with five people who worked on the magazine at various times since 2004, McNeil's company, Maven Media Group, which publishes OverTime, owes money to vendors, freelancers, and former staff. One source with intimate knowledge of its finances -- who is owed more than $8,000 by Maven Media to date -- said the company owes "considerably more than $100,000" to former magazine staff, freelancers and vendors. "[$100,000] wouldn't even cover the loans [McNeil's] taken out," she said.

Of course, that's based on a few sources that may or may not be correct, and the publication claims that everyone has been paid. However, there are enough questions raised in this piece that, personally, I'd steer clear. There are too many problems in the business world. Why walk in a direction with signs proclaiming alligators, quicksand, and stinging flies?

Making Sure to Get Paid

There was a recently extended discussion on Freelance Success of troubles in getting paid by clients. I'm not going to pretend that I never have to chase payments - everyone does every now and then. But I do minimize it and reduce the amount of time to get a check with the following steps:

• Ask About Paperwork Right after geting an assignment, ask about the paperwork you'll need to provide. The company will need a W-9, unless you've worked with the client before. You may need a contract to get paid, or not. But make this part of what you ascertain when talking about pay rates, deadlines, and rights license.


• Talk To Account Payable Shortly after you start the assignment, it never hurts to talk to accounts payable, ask about what they need, which can differ from what an editor or corporate representative thinks. Particularly ask about what the company will need on an invoice. Do you need to include social security number? Is there a purchase order number that you have to include? Are there specific addresses or division names that must go onto the invoice? Get all this clear up front, because the people asking for your services may actually not know what they're supposed to do.


• Start the Clock When you submit the assignment, or any milestone part, submit the appropriate invoice. If the client wants changes, you can provide them, but maximize the chance that the receiving person must have received the invoice. If they got the work, they got the invoice, so long as you send the two in together.


• Check on Progress This can be a bit sticky. You must not be beligerant about it, because that will be off-putting, and people might delay processing your invoice out of irritation and spite. But you want to find out whether the invoice is in process and when it would be scheduled to pay. You must ask accounts payable about this. Your editor or client doesn't want to spend the time finding out, and they won't know and might lie because they are embarrassed about not knowing. The accounts payable contact might say that it isn't yet in the system, so try back in another week or two.


• When Things Go Wrong Notice that I don't say if, but when. That is because, even with the best clients, sometimes that will happen. If you hear that the invoice hasn't been received yet, you might want to talk to your business contact, mention that accounts payable didn't have it, and ask how long processing generally took, letting the person have the out of saying that accounting lost the invoice. Sometimes accounting does screw up and tries to blame others. In my experience, more often it's other people who don't do their end of the paperwork and try blaming accounting. No matter what the situation, you don't care. What you want is a check in a reasonable amount of time.


• Making Friends Notice that I keep talking about contacting accounts payable. You want to make friends with accounting, because they have the best chance of telling you where things actually are, and when the check will arrive.


• Don't Wait I've said this in a number of ways so far, but will underscore the importance of not waiting until money is running late. Until you know how a given organization runs, assume that you need to check on them - and even when you know them, keep tabs on how things are going, so you can tell when something is going wrong for whatever reason. That recently happened to me with a good client that got a bit confused over the number of invoices that had some in over a short period of time and which ones they had paid. I was able to help straighten out the situation, and they got payment out right away.


• Squeeky Wheel When things aren't going right, do not - I repeat, DO NOT - nicely go off. Be pleasant, but stay on top of the situation and be sure that you get the answers you need. If you are persistent, they will get you what you need to keep from getting another call. If you aren't getting answers, then keep calling - using whatever code you need to eliminate caller ID from telegraphing your identity - until you reach someone.

I'm not going to talk about what to do when you can't get paid, as that's a different issue. Instead, focus on how you can get others' business processes to work with your needs so most of the money you are owed comes as quickly as you can get it.

Check on Invoices Early and Often - at First

I find that most companies have their own rhythms when it comes to payment - their own processes, cash flow, and requirements. Often the buyer at the client - whether editor, corporation, or organization - doesn't think much about those processes. Your first invoice with someone is always tricky because the accounting department has to get you into the account payable system as a vendor, which might require additional authorization than just getting an invoice signed and passed in.

So on that crucial first invoice, I check right when it's due - sometimes asking the person I dealt with, but more frequently, now, going right to the accounts payable department. These people aren't shy about talking money and actually expect to hear from their vendors with problems and questions. Call and ask how the process works and see if they have your invoice. Explain that this is a regular process you go through to make sure things are working smoothly and to better understand their process, and that you're not standing over their shoulder about when you will be paid for this particular check. If there is a problem, like someone not filling out paperwork or an invoice not arriving from the buyer, then you can start taking corrective action rather than waiting weeks more and getting your stomach in a know. It's just business - so just take care of it.

Never Walk Away From the Good Fight

There will be times (if you haven't already seen them) that you are in conflict with a client. Perhaps it wants to unreasonably delay payment or demand significant more work for no extra compensation or ask you to shoulder other burdens that never were mentioned during discussions of the assignment. You may have talked to the people involved, trying to get a resolution, but to no avail.

I understand the reluctance to take significant action. A number of thoughts are running through your head - don't want to lose the client, I'm friends with the editor, what if they get angry because I hate conflict - as your emotions bubble over. And I certainly understand how you would prefer a reasoned solution that got you what you needed. Obviously if that is possible, then it's a good outcome.

But there will be times that does not happen, and the company is happy to string you along or out or whatever preposition best describes your state of misery. In those circumstances, for your own sake as a human being, you cannot back down or give in. To do so is to allow yourself to be stepped on. That sets a bad precedent for the future and puts you further into a frame of mind where you feel like you're getting what you actually deserve: "If it's happening, then I must have done something to bring it on." This is the abused spouse mindset, and one that you must discourage.

That doesn't mean you necessarily become crazed and demand a knock-down, drag out fight. However, you stand firm for what is right and take the actions necessary to see it happen. It's good for you, it's good for your family and friends - it's particularly important if you have children, because somehow they know when you act in a righteous, and not self-righteous, manner and it teaches them to stand up for themselves. It's good good for the writing community, and it's good for the world. If people firmly planted their feet at such times, we'd have far fewer tragedies, because we would not let things go so far.

Be firm and hold your ground. You did the work and they owe you the money. If they want more work, they can pay more money. Insist that they make good. And when they do act in a reprehensible manner, add your voice to the others descrying such atrocious behavior. The more you do this, the lest often you'll find people ready to take you on. You don't go into new business relationships with a chip on your shoulder and frothing at the mouth because you won't have to. People will just know. And, more importantly, you will know. You may win, you may lose, but you'll feel better about yourself no matter what.

When Things Go Wrong, Negotiate

Yesterday I mentioned that when things are going well, you should continue marketing with a focus on things you might not ordinarily do. When things go wrong, yes, you market, but you might also consider negotiation. Instead of taking whatever life deals out, see how much you can change more toward your advantage. I had a real example happen yesterday when a publication decided literally at the last minute because of a mix-up on its end that it needed substantial changes to a story. It was pulling the article from the current issue and now the piece was no longer accepted. I did start gnashing my teeth and began writing an email to the editor because I couldn't afford to disrupt my cash flow further than a couple of previous setbacks had already done.

I started the email a few times - got a line or two in and tossed it. Remembering my goal - to get money - I knew that venting at the editor would do no good. So I carefully crafted a message saying that we needed to talk and that while I understood there was a mix-up on the publisher's side because I got the go-ahead from someone new who hadn't known of the history of covering a given topic, I couldn't add another invoicing cycle on top of what I had already waited.

That was the first part of my negotiation strategy - because I wanted a practical resolution, not the emotional satisfaction of screaming at someone. Next, I said that if we could work out payment issues, I'd be happy to do a few extra interviews and the rewrite "to reflect what is now a different angle and article." I was clearly indicating that additional pay over the original fee might otherwise be in question. Could I have held out for more? Sure, but I was considering the most important goal in this case - while realizing that it would largely be a case of reslanting much of what I already had in a somewhat different way.

Later that day I received a counter-proposal - a one-third "kill" fee immediately, and the remainder on rewriting the article. Because I had overbooked revenue above my target goal, I could agree to that, maintain a relationship that I expect to be a profitable one (I already had a second assignment and had negotiated a 20% rate increase between the two), and still have the cash flow for the full goal, with the extra to follow in the future. So I agreed.

Did I get everything I wanted? Of course not! But did I get what I needed then? Absolutely. And if that hadn't done it, I would have looked at other possible negotiation strategies. Negotiating out of a problem won't always work - it didn't do a thing when early this year I had a client declare bankruptcy. But it's a potential tool that might get you out of a jam, so don't assume that you only use negotiation before you start an assignment. Any time an issue comes up - payment, or maybe a sudden change in an assignment or deadline - negotiation is useful. And it's a great deal more effective than tying yourself up in knots or posting on a writers' board how angry you are with someone.