My best clients pay on time.  In fact, many of them pay early.  It’s the kind of reciprocation that not only makes me smile, but makes me feel like my work is valued and enough to ensure that, when it comes to billing and perks, I will do my best to give these clients the same back in kind.  I suppose you could call it the Golden Rule but,  to me, it’s just the fair and honest way to run a business.  These clients are important enough to me that I will go the extra mile to let them know it.  In short, I’ve moved my schedule around to accommodate their needs, I offer complimentary discounts, I’m much more flexible when it comes time to negotiate additional terms, I think of them first when it comes time to mail out care packages (from my garden every year, eh?), and I definitely –most definitely –let each accounting department and their bosses know how much I value their attention to deadlines.  

It’s a pleasure to work with people that understand the importance of making timely payments (especially since, as photographers, we understand the importance of submitting our work to meet publication deadlines).  At a very basic level, regular and timely payments ensure that your business is able to return the favor to its creditors in the same, timely manner (and, in doing so, also avoids interest and finance charges related to late payments).  This cycle is part of what is called ‘cashflow,’ or the cycle of cash in and out of a business.  Without diving too deep into this subject, a healthy business should have enough cash flowing into the business each month to, at bare minimum, cover its periodic expenses.  For example, if you have $100 in expenses each month, you need to bring in $100 to cover that debt.  Reductive?  Yes.  Obvious?  Yes.  (So, CPAs, don’t get your panties all bunched up because we’re not talking about the finer, nuanced points of corporate finance).  

In the same example, if your business brings in less than its monthly expenses, you will end up paying finance charges and late fees for the overdue payment or you will borrow money from a line of credit in order to make the payment.  In either instance, poor  cashflow management costs you money and requires you to remain vigilant on your accounts receivable so that this situation doesn’t recur to the point that you can no longer remain solvent.  

Complicating this cycle are changes in expenditures.  Certain things remain relatively fixed –utilities, rent, professional services, etc. –  while others fluctuate.  A camera breakdown?  Car explodes?  Or, more appropriate to the example, a client hires you for a shoot that requires expenses related to the shoot’s undertaking.  Gas, hotel, meals, models, equipment rentals, additional staff, makeup, props, etc.  You will incur these expenses on behalf of your client and you will (hopefully) bill a reasonable amount with a reasonable deadline for payment so that you, in turn, can pay off the creditors who helped you make those purchases (even if that creditor is your own savings account).  

In order to handle these expenses, I bill on a NET 30 basis.  NET 30 means that my client is responsible for paying their debt in full no more than 30 days from when my services are rendered in full.  The reason that I elect this billing cycle is simple: my creditors operate on the same cycle.  So that I can pay them on time, my business requires a regular influx of cash on the same cycle in order to cover those expenses.  This is particularly important in instances where the execution of a client’s job requires additional expenses above and beyond my fixed overhead.  In short, keeping to this cycle –and explaining its importance to reluctant clients –helps my business remain solvent and steer clear from the trappings of becoming a bank for my clients.  

For a listing of several other standard payment terms, visit this page.  Choosing the right payment terms for your business is integral to keeping it open for the long-haul.

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Matt Slaby is a Colorado-based attorney (and photographer). Matt attended the University of Denver College of Law on a full public interest scholarship. His experiences in law school include a PILG clerkship for ongoing civil work with El Centro Humanitario’s legal clinic as well as handling wage claims and contract issues for DU’s Civil Litigation Clinic. He is a founding member of Luceo and, in addition to his photography, brings his legal background to the organization. Questions, comments, and ideas for future posts are welcome. Please add them to the comments section or reach me here: mattslaby@luceoimages.com

**DISCLAIMER: Luceo Images LLC and Matt Slaby assume no liability for the information provided above. This information may not be correct when applied to your specific situation. Moreover, the information provided is not intended to create an attorney/client relationship and shall not be construed as legal advice.

My best clients pay on time.  In fact, many of them pay early.  It's the kind of reciprocation that not only makes me smile, but makes me feel like my work is valued and enough to ensure that, when it comes to billing and perks, I will do my best to give these clients ...