From time to time, newer professional photographers ask what they should do when a client is late to pay. The answer is easy: remind the customer to pay.
Okay, maybe it’s not quite that simple although it can be.
When a client hasn’t paid within the time period set by the photographer, often the reason is that the client has lost or misplaced the invoice, or they’ve simply forgotten to pay it. (Yes, it would be nice if we could “forget” to pay our bills.)
E-mail the client and politely remind them that there’s no cheque in the mail:
Hi Jennifer,
Would you please check to make sure that my invoice #12345 (attached below) has been processed. It’s been 35 days and payment has not been received.
The invoice was for five business portraits done on November 15, 2011 and the finished pictures were delivered on November 18.
Could you get back to me today and let me know where we stand?
Thanks.
Often that’s all it takes to get the client to pay the invoice. Most clients are honest and mistakes or delays do happen. It’s not a crime to ask for payment and you’re not begging for money.
If this doesn’t work then what to do next will have to be the topic of another post. Unfortunately, unlike the UK, Canada does not have any late payment legislation.
[Added October 27, 2016: New York City enacted a new law to help freelancers get paid on time.]
It’s very important that your contract specifies the terms of payment. It must say that full payment is due within “X” number of days. Otherwise the client can pay whenever they want. You can set any time period you want. But note that some companies and government ministries require anywhere from several weeks to a few months(!) to pay.
Always use a conditional statement that says something to the effect of: “you have to pay me in full before you get usage rights.” If such a statement is not used, a client can use the pictures and not pay and, at best (at worst?), the customer is guilty of non-payment of invoice. (I’m not a lawyer, etc.)
By using conditional statements, a non-paying client who used the pictures could also be guilty of copyright infringement. For examples only:
No rights granted unless and until Photographer has received payment in full. Any use prior to full payment will be considered an unauthorized use.
Or:
Grant of any usage rights to the Client is conditioned upon receipt of full payment by the Photographer.
Photographers can charge interest on late payments but keep in mind that the legal maximum rate is 60% per year. If no interest rate is specified then, I believe, it’s 5% per year.
One problem with charging interest is that a small number, for example “2% per month interest”, may have little impact on a client since that number isn’t seen as “real money”. It might be better to impose a specific late fee. For example only:
All invoices are due upon receipt. A re-billing fee of $25.00 will be added to all unpaid balances after each thirty-day period.
If a fixed, monthly late fee is charged, that fee can’t exceed the legal maximum of 60% per year.
A second problem with charging interest or late fees is that the photographer has to keep sending monthly statements to the client to show them how much interest or late fees have accrued.
A third problem is that some companies will claim, “It’s against our policy to pay interest or late fees.” (Yeah, right. Try that the next time you have to pay a late phone, cable, or credit card bill).
An alternative method is to reverse the situation. Instead of punishing clients for bad behaviour (paying late), reward them for good behaviour (paying on time). Instead of charging them more money (interest or late fees), charge them less.
When estimating and invoicing the client, add an administration or handing fee right from the get-go, along with a statement such as:
This administration fee reflects our cost of having to follow-up on overdue accounts. If full payment is made before [date], this fee may be deducted from the total amount due.
Or:
This administration fee reflects our cost of processing and maintaining client accounts. If full payment is made by [date], this fee may be deducted from the total amount due.
Example: for a $2,000 photo assignment with a 5% administration fee, the estimate and invoice might indicate something like:
Total Amount Due: $2,100.00
If paid in full before March 15, 2012, then Amount Due: $2,000.00
It’s very important to note that the photographer is not discounting the assignment fee or any expenses. The photographer is adding an administration fee to the overall project and then offering to waive that fee if the client pays by a certain date.
This is not a monthly fee, it can be as high as you want (within reason), and it gives the client a real, visible incentive to pay on time.
Please check the date of this article because it contains information that may become out of date. Tax regulations, sales tax rules, copyright laws and privacy laws can change from time to time. Always check with proper government sources for up-to-date information.
