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  • #987273
    gareths
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    Hi.

    I would like to know what is an acceptable amount of time to ask a client to pay an invoice. On my website I have clearly stipulated that I expect to be paid within 7 days for my work, but some other business people have told me that is unreasonable and it should be more like 28 days.

    I feel that if I leave it that long, clients will forget to pay or ignore the invoice altogether. I am not one for doing what everyone else does, but if that is what’s expected then I guess I will.

    I was also told I shouldn’t chase clients for money as this annoys them. That concerns me more, as I am not just going to let people get away with not paying. Annoying it may be, but if they stay within terms of trade it won’t be a problem.

    Clients would not wait for a month for me to return their orders, so why should I be made to wait that long by them?

    #1161901
    bluepenguin
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    It looks like you’ve been given some bad advice.

    It’s your business, and your talent. If people truly value what you do and want to work with you, then be bold and expect them to work to your terms, whether that be payment upfront, on delivery or 7 days.

    Of course, there may be exceptions – like if you land a large corporate and they only pay at certain intervals, but in this case, you just need to weigh up whether it’s worth being flexible for a job that may have a much larger reward then normal.

    As far as reminders go, some people need to be constantly hassled until they pay – it’s just the way it is. If you don’t want to come across as annoying, get hold of a program that sends automated reminder emails at set intervals – and make the emails look quite automated. You’ll find you can be a bit more harsh this way, without stretching any relationships.

    And if clients don’t want to work within your terms, or they get annoyed by your reminders, go find better clients.

    #1161902
    gareths
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    Thanks for this helpful advice bluepenguin.

    I certainly feel like I know what I am doing. I am very definite when it comes to my business and I want to run it my way.

    On the other hand, the person who gave me that advice is my father in law, who has ran his own successful company for 25 years. He helped get me my first client, who is an associate of his and I don’t want to do anything that might jeopardise the family dynamic.

    I guess he didn’t want me to bother his friend too much in case it came back on him, but in the end it’s my decision.

    Will definitely take on board what you said.

    #1161903
    Cooke Consulting
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    Totally agree with Steve on this!

    Gareths: If it is of any help to you have a look at a couple of my blogs – it might help you shed some light on what you need to do in the future when it comes to clients that are slow in playing:

    Do You Have a Debt Management Strategy

    Winning Tips For Calling Your Debtors

    All the best,
    James

    #1161904
    bridiej
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    I have always had 7 day terms. The only time I change them is when dealing with government organisations, as they tend to work on 30 day terms and there’s little point expecting it quicker!

    #1161905
    gareths
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    Thank you all for your comments and suggestions. I am going to the Small Business Development Corporation tomorrow to discuss this and other aspects of my business model to see if I am on track.

    #1161906
    Greg Mawer
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    Hi Gareth,

    How did your meeting with the Small Business Development Corporation go?

    Cheers.

    #1161907
    gareths
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    Hi Greg.

    I didn’t get the answers I wanted from the SBDC, but that’s just me being stubborn rather than them giving me bad advice.

    In a nutshell, the consultant basically said

    – My prices were too low and should be in line with industry rates and take them off the website so there is room to negotiate.

    – I should bring my terms of trade in line with the industry standard of 28 days

    – I should scrap the 1% per day penalty and make it line up with credit card interest – around 1.5% per month, but don’t advertise this on my website.

    – Don’t send out bulk emails about the business as its spam and will be deleted but use mail instead after contacting potential clients on the phone first to get their permission

    – Be more involved in networking and small business forums like FS.

    #1161908
    bridiej
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    gareths, post: 187525 wrote:

    – My prices were too low and should be in line with industry rates and take them off the website so there is room to negotiate. < good news!

    – I should bring my terms of trade in line with the industry standard of 28 days < hmmm, I disagree. I have had no problems with 7 day terms and I’ve had the same terms for over a decade. 28 days is fine if that’s what you want to do, but bear in mind it will affect your cash flow.

    – I should scrap the 1% per day penalty and make it line up with credit card interest – around 1.5% per month, but don’t advertise this on my website. < I charge a 10% late payment fee once the invoice is 10 days overdue, then a further 10% if it’s still not paid after 30 days – at which time it is given to a debt collector as well. It’s not on my website, but it is on the Terms of Business each client has to read and sign before I do their work. Late payers also have to pay upfront next time.

    – Don’t send out bulk emails about the business as its spam and will be deleted but use mail instead after contacting potential clients on the phone first to get their permission < while this is true if you don’t have permission, there is nothing wrong with adding a sign-up box to your website and inviting people who visit your site to opt in.

    – Be more involved in networking and small business forums like FS. < Again, I would disagree. If your client base goes to networking events then yes, you should go too. You really need to sit down and work out where your client base hangs out, for instance social media might be more effective. Also, I don't look on FS as a way to increase business, but it is certainly a helpful place to get to know people, learn and have the opportunity to help others.

    Hi Gareth,
    I’ve added my thoughts above. HTH :)

    #1161909
    gareths
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    Thanks Bridie.

    You make some good points, especially in relation to terms of trade and cash flow.

    I will look at adding a sign up box on my site, that is an excellent idea and gets me around the whole spam email thing.

    #1161910
    affgar
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    A few notes.

    You want payment upon completion of work. Though you need to get upfront payment & progress payments depending on what you are comfortable with & how large the job is.

    In a service industry you want to get payment immediately after work is completed.
    I give 7days payment (not for affinityshop .. always payment up front) but this is because I trust my valuable repeat business clients.

    A better way to look at things is this option:
    try to give a discount for early settlement … as opposed to charging late payment fees & creating negativity. So basically you charge those who will pay you quickly the right price .. & those who want to piddle & fiddle can pay a higher rate.

    Email is very valuable(when done correctly). Don’t waste your time & money with mail unless you have to & your clientele warrant this approach.
    You are getting some bad advise.

    Many people new to business do not factor in all costs. Yes you want to be cheap to start with to get interest & client base … then you lift your prices in line with reality. Never underestimate your costs. If you haven’t properly evaluated your cost structure you need to before you move another inch.

    Feel the market see what the going rates are & demand.
    In high competition areas you have to be in the ball park .. unless you can provide something that other people don’t.

    Do the little things right … if you say you will ring someone … do it. If you say you can deliver something … do it. Don’t over promise & under deliver.

    You do not want to end up down the debt collection path … it’s bad for everyone. There are some rogue non-payers who line you up & knock you down. You will learn to spot them in time.

    If you are setting up account 30 days is normal … but don’t do it unless you can afford to lose the money.

    You want to be in a predicament where you can give a little more for the money .. rather than trying to skimp on things because you charged too little.

    It’s a tough environment at the moment. Do the little things right & you are half way there.

    Hope something is useful amongst my dribble. :D

    #1161911
    affgar
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    I just had a look at your pricing … ouch!

    Most of what you have stated in prices should be quoted jobs. If you state prices then it should be starting from, or a general range.

    You need to charge in relation to the over all value of the finished work.
    If you are involved with advertising a huge shambles of an energy consuming dump (a RE property lol) then look at the value to the client. You may be charging like 0.001 percent of the product value. Yes you are probably not the only one involved with the ad so you may need to be price competitive.

    If you are doing a voice over ad .. the customer pays once … for maybe $100,000 worth of product life cycle advertising(who owns copyright?).

    Don’t pitch to penny pinchers or people who just want to use you because you are ridiculously cheap. Those people potentially will take you for granted, not value your work the way it should be, will start to think they deserve to pay a pittance.
    You end up damaging your credibility, others in the field will be horrified.

    Some clients want bottom dollar … trust me they are often the most difficult to work for or problematic… same could often be said about the top end clients as well.

    Let me just pick apart one of your price points/products offered:
    VOICE OVERS/AUDIO RECORDING – $75

    A standard job flow .. in my eyes.

    1) advertise for client or put yourself out there
    2) meet client, car, phone calls, emails, mail, waiting for client, 30min appointment?
    3) research the product to improve the end result .. give client the best you can.
    4) actually record the audio … might take 1 hour
    5) factor in equipment costs, purchasing, upgrading audio equip, breakage. I won’t go into all the audio equipment involved, computer etc … rent/office?
    6) export project, burn or save to media … get it to the client.
    7) Client says .. sorry I am not happy I want it this way … back to step 3?
    8) Client has deadline .. booked commercial time & you missed it … cost them $1000 & they want to pass that on to you or sue you … or just not pay you.
    9) Then we have admin costs, invoices, printing, tax, accounting etc …
    10) hope they pay you on time … damn shame if you have to chase them (as I said those who pay too little will think they can take you for a ride).

    Not to mention .. someone who sees a price that low could expect a bad quality job/product. But also, putting your cost out there so low … what if someone wanted a harbour side production with an orchestral background … (someone might want to pay you $10,000 to get a job done for a $250k promotional production). They might stand to earn 1million from your ad.

    I hate to be negative … but I would rarely get out of bed for double that price. In service industry/creative industry.

    So I would estimate that each job you get in this category, you would lose approximately $75…. It may sound harsh but that is my opinion. The what about a little profit on top of your running expenses.

    Advertise yourself to people who want the best you can offer them. Don’t sell yourself short. Then do a great deal for that person who can’t afford the full monty & you like them or think you could trust them or get future work out of them or contacts.

    Having said all that though … if you are new to industry & just need the experience then charge low rates & get jobs under your belt. Better than twiddling your thumbs cause your prices are too high. It is fun, rewarding work also.

    I am not trying to offend you … I am just trying to express business value & costings that need to be taken into account.

    #1161912
    gareths
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    Hey thanks Affgar.

    Not offended at all, and you raise some good points.

    I have kept my pricing low at the moment in order to attract business, I feel as if I go to high to start with I’m not going to get anywhere.

    I’ve done a market analysis of my competitors and their prices range from $85 to $360, so I thought coming in just under the lowest priced competitor would be better than going too high and pricing out of reach.

    I am also targeting the smaller businesses and non profits. I doubt they would be able to afford anything if I took the prices up too high.

    The prices have come down off the website now, I don’t want people to look at that and think I am too cheap.

    I do offer discounts for early payments, and if I haven’t already I will be taking down the penalty rate. No good for anyone really.

    #1161913
    affgar
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    Nice Gareths,

    I think it can be good to have some price guides or estimations of a certain package that people may be interested in. But always offer quoted situations.
    That way you can cater to everyone. Also say to your client … i prefer to quote because then I won’t shock you with the final price & it’s clear for everyone.

    Maybe still keep a late payment fee plus interest hidden in the paper work. Should have a contract to sign for works. Especially clearing up copyright & ownership right of material produced once it leaves your office.

    Don’t undercut everyone. Many clients after quality work will not touch the lowest prices. There will always we rogue operators who don’t pay tax & work for cash … or do shocking work.

    Clients want to trust you & what you offer. Build that trust. Lowest price is not about trust … it’s a problematic demographic.

    Unfortunately for me moving into a product field .. it is about price lol. But not in my service industry. I charge amongst the higher end prices. And have repeat clients for years.

    Don’t charge people prices on what you would want to pay … starting out. I always made that mistake early on. That leads to you being poor & other being richer. lol

    Market analysis is good .. but what are they offering? How are they packaging or presenting their product. Do they call the client after the project & see if they need help with anything related to what you provided.
    There are many things you can provide that others will not.

    But if you don’t charge a decent price .. you won’t put food on the table.
    I can’t judge your market & your product specifically but if you are saying for a specific product the competition is charging $85 – $360.
    Then if I were you, I would charge $150 upwards .. depending on how much value you can get them to sign up to.

    Smaller business & non profits … good (sometime the wealthiest magnate talks about how they can’t afford to pay a pittance). This is where quoting comes in though … you can charge less for a good cause.

    Good job … keep striving & seeking. You will get there.

    #1161914
    gareths
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    This is a bit more of a detailed analysis as to what the competitors prices include. Can’t say about what they do after completion though as I got this information without placing any orders with them.

    Competitor 1: $168.00 includes Voice Talent Booking, Studio Hire, Recording of Talent with a Producer, Editing, De-Breathing, Production Music Mixing, Audio Processing, File Delivery, based in Queensland

    Competitor 2: $140.00 – Full production and editing, digital file delivery
    $60.00 Recorded voice over with no editing or production, digital file delivery, QLD

    Competitor 3: $120-$150 – Recorded voice over by professional talent, editing and post production, file delivery, WA

    Competitor 4: $85.00 – Voice over, music, sound effects and production, TAS

    Competitor 5: $341.00 – Scripting, recording, voice talent and studio hire, editing, processing, production, music, and digital delivery, WA

    Stafford Media Solutions: $75.00 – Recording, full editing and de-breathing, processing and full production including music and sound effects if required, scripting also if necessary, digital delivery

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