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FORUMS Post Processing, Marketing & Presenting Photos The Business of Photography
Thread started 02 Mar 2005 (Wednesday) 16:45
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STICKY: Terms and Conditions - it is all about money.

 
KennyG
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Mar 02, 2005 16:45 |  #1

I posted a short piece a while ago about being accurate regarding what you provide to clients so there is no confusion by either party. Well, you are about to do the work, but have you agreed how and when payment will be made? These are the commercial Terms and Conditions of your business and could end your business before it has started unless you get it right.

You must have Terms and Conditions and your client must sign/accept them before you do any work. There is no maybe about this one, if you want payment for work then your clients must have no misunderstandings about your business terms.

Two words to govern your business life - CASH FLOW. You can't afford to buy an album for a new client because the last one has not paid you yet - NEGATIVE CASH FLOW, three very, very bad words. Your terms of business are designed to protect you from slipping into this oily pit.

Rule one - NO CREDIT. Accept deposits but nothing less than will cover your expenses and material costs. Get the balance the second the work is done, no extended terms. This is a business, not a charity and when it comes to money, stop being nice, nice does not get people to pry open their wallets.

So, what should your Terms and Conditions say? I have no intention of writing them for you. A business lawyer did mine and it wasn't cheap, but you can start with some simple things.

1. Payment terms - Deposits and when the balance is due.
2. Methods of payment - Cheques (checks) must clear before any work done. Set up a merchant account (not sure what that is in the US) to accept credit cards and add any surcharge the bank applies to you. Get that money into the bank before you pick up your camera.
3. Discounts - For cash only and 100% up front.
4. Refunds - No, this isn't a joke. If you make a mess of the work, give the money back, it is your fault. If they make it impossible for you to do your work, then you should either not refund or retain enough to cover all your costs.
5. Copyright - Up to you. In my work I retain all copyright and only give permission for use. You may want to charge for re-prints or other use of the same images. Don't give this away unless you have a very good reason and the payment makes it worth while.
6. Disputes - Give a fixed number of days for a complaint to be registered. Make sure you follow up any complaint, do not bury your head in the sand, they will not go away and trust me, they will come back to haunt you.

Don't forget that your terms of business should include a statement about booking dates. This is very important for wedding photographers in particular. You know your business and it is your decision how you handle this. You could allow 3 months notice of cancellation with say a 10% charge if you think you can fill the slot in that time. If you are struggling to fill slots you may want to keep a larger percentage. Whatever you decide, it should be part of your standard terms.

I could go on and add to the list, but I hope you can see the point here. Tell the client up front how/when you want payment for the work and make sure the deposit covers your costs. You will probably have to average this out and it may be that 50% deposit will normally cover your costs. Some you will win and some you will lose, but the aim is to make sure you never slip into the oily negative cash flow pit.

You can get ready made T'c and C's to adapt for your business. I have known people adapt them from copies they have had to sign themselves. However you do it, just make sure you have them. If a dispute goes to court they could save the day, or even your business.


Ken
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PhotosGuy
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Mar 02, 2005 21:44 |  #2

Good advice, Kenny.

I like this Contract term:
"3. Grant of Rights.
No rights are granted to Client until Photographer has received payment in full.
Upon receipt of full payment, Photographer grants to the Client the following rights in the Work."

For more, see: "Why You Should Use Conditions in Your Licenses" in http://www.photoattorn​ey.com/?s=conditions&x​=0&y=0external link
On 06.01.11, In Copyright Infringement, Licensing, by Carolyn E. Wright

Now Available – Forms for Photographersexternal link


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robertwgross
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Mar 03, 2005 00:36 as a reply to PhotosGuy's post |  #3

Once a client asked for a statement of proposed work. My partner and I talked it over, and then I sent a statement of the scope of work, and the fee amount stated, and that it was "NET 15". That means we do the work and hand the client the invoice immediately, and then the client has 15 days to pay us. For us to go ahead and start the work, we needed to see a purchase order from the client. The client kept hemming and hawing around and would not send the purchase order, yet kept demanding that we show up on a certain day. Reluctantly, we showed up to do the work, but we weren't going to start until we saw the purchase order. The client came up with one excuse after another and then accused us of wasting their time. Finally, they brought in the purchase order and we began the work. As we started, I quickly read over the fine print. In the terms, they added the phrase "2% NET 30". That means that they could wait out until almost 30 days before paying, and they would still take a 2% discount. That, in my opinion, was hitting pretty low. I should have pulled the plug on the job. The manager that pulled this stunt gave people of a certain ethnic origin a bad name.

---Bob Gross---




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pradeep1
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Mar 03, 2005 06:18 as a reply to robertwgross's post |  #4

Terms and Conditions are critical. I have them printed on all of my invoices, quotations, etc. automatically. But I vary terms for my customers based on their history with my company. Some get net 30 days, some net 10 days, some CASH, and some get an open account which gets billed monthly like a credit card and as long as they pay what is due from the previous month, they can order as much as they want up to a certain dollar limit. Of course, I have a wholesale business selling to other businesses, so I can offer these types of terms because of the business relationships. But if you are dealing with the general public, then the caveats in this thread are useful.

Another common variation on this theme is the 2/10, net 30. Which means that if they pay you in full within 10 days, they get a 2% discount, else they have to pay 100% if they pay in 30 days. This is sometimes an incentive to certain types of people, and... ahem...ethnic groups, especially some groups that tend to own a lot of cash based businesses. I am Indian, so sometimes this works well with those types of clients. ;)


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jrobert
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Mar 03, 2005 10:55 as a reply to robertwgross's post |  #5

robertwgross wrote:
The client came up with one excuse after another and then accused us of wasting their time. Finally, they brought in the purchase order and we began the work. As we started, I quickly read over the fine print. In the terms, they added the phrase "2% NET 30". That means that they could wait out until almost 30 days before paying, and they would still take a 2% discount. That, in my opinion, was hitting pretty low. I should have pulled the plug on the job. The manager that pulled this stunt gave people of a certain ethnic origin a bad name.

That was certainly an underhanded thing for them to do and you'd have been more than justified in walking. But why would you generalize that experience, with one or a couple of people, to a larger group?

-jeff-




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robertwgross
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Mar 03, 2005 11:17 as a reply to jrobert's post |  #6

Jeff, all of our previous dealings with that same company had been pretty straight. However, this one manager was trying to get things done within her company without proper upper management approval or signing authority. We didn't know it right at that time, but later on we discovered that this one ethnic group (within the company) was trying to run things their way, management be damned.

After we were finally paid (late, at 45 days, and with 2% discount), we were in a private meeting with higher-ups in the company, and we mildly mentioned the incident. The VP showed a grimace and then said that he was aware of the problem.

The whole culture of that company changed within a year after that.

---Bob Gross---




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jrobert
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Mar 03, 2005 14:38 as a reply to robertwgross's post |  #7

I'm glad to hear it eventually worked out for you and you didn't end up getting stuck. Sounds like the company made some needed changes, too. I've only had one problem getting paid for my services (engineering) and, similarly, it reflected trouble within the company, not (I prefer to think) a pervasive attitude of stiffing suppliers.

-jeff-




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robertwgross
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Mar 03, 2005 15:09 as a reply to jrobert's post |  #8

Then there was another awkward situation. My partner traveled to Santiago, Chile, to do five days worth of work for $2000 per day, as agreed upon. At the completion of the fifth day, he submitted an invoice for $10,000 even, net 15, by wire transfer. The client company hemmed and hawed and admitted that they might not be able to pay that much.

Then they asked him if he would take only $7,000 in cash. Wow! My partner thought about it, since it would be "off the books", and then he thought about pickpockets as he would be strolling around the Miami airport terminal to make a connection. Hmmm. So, he turned down the cash. The client finally paid up about six months later, but we never did business with them again.

---Bob Gross---




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robertwgross
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Mar 03, 2005 16:49 as a reply to post 434078 |  #9

Bloo Dog wrote:
I've noticed that the bigger the company, the slower the pay.

Agreed.

Bigger companies have more bureacracy.

---Bob Gross---




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cricket
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Mar 03, 2005 21:01 as a reply to robertwgross's post |  #10

This thread really interests me.

I have never dealt with a purchase order before, but would really like to know if/when I might need one. I do business/executives along with my other portrait photography; the word has gotten out, and I am wondering if I'll ever need one...


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robertwgross
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Mar 03, 2005 21:15 as a reply to cricket's post |  #11

If you tell your client that you will shoot their portrait for $50, and then you do it, and then you present the finished work to the client and they say, "I changed my mind." You are stuck. Verbal agreements don't stand up well.

On the other hand, if you furnish a scope of work statement on a big job, and you spell out what each of the deliverables are, and then you spell out your fee and the terms of payment. The client company will then issue a purchase order that normally has your scope text attached to it, so that spells out exactly what the details are. Then you deliver your work. It is a good idea to provide an invoice right then and there. Normally, the invoice mentions their purchase order number, and you have the client sign the invoice that they have received the work. Then the invoice goes to the Accounts Payable Department, and then they pay it by check with the purchase order number and/or invoice number referenced.

---Bob Gross---




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pradeep1
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Mar 03, 2005 21:20 as a reply to robertwgross's post |  #12

robertwgross wrote:
Agreed.

Bigger companies have more bureacracy.

---Bob Gross---

That or they know that they represent a sizable volume of your business and that you won't raise too much of a fuss if they don't pay on time. Some of my largest customers are the slowest payers. But I wouldn't dare fuss too much. When I really need the money then and there, I call them up and let them know and they cut me a check. But given the option, they'll take 30-60 days to pay. Such is life and business.


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epeace
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Mar 04, 2005 10:01 |  #13

What if the company doesnt have a purchase order system?

What do you do when they say "A purchase order? We dont have those. . "

Do you just have them scribble something out in MS Word with your scope attached?


/ // epeace / / /
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Andy_T
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Mar 08, 2005 09:06 |  #14

You just put this as final lines on your scope of work:


Purchase order

I agree to buy the services as specified above
(signature, date, stamp)
Please fax back to ....

Best regards,
Andy


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pradeep1
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Mar 08, 2005 15:59 as a reply to epeace's post |  #15

epeace wrote:
What if the company doesnt have a purchase order system?

What do you do when they say "A purchase order? We dont have those. . "

Do you just have them scribble something out in MS Word with your scope attached?

Type up an "Order Confirmation" or "Statement of Services" and list out everything in detail. Have someone who can authorize payment sign it. If it is for a large amount of money (over $2000), and you are dealing with a relatively small company, get a personal guarantee by the owner that they will honor the debt to you if they file bankruptcy for their company.


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Terms and Conditions - it is all about money.
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