Reposted (with Permission) a TIVA-DC posting from Marty Atias - ATS Communications.

Here's a topic for discussion

Sometime last year (as I recall) TIVA held a meeting on the topic of business practices, which I could not attend, so I do not know what was covered. It arose out of a similar thread dealing with agreements, contracts, invoices, prior agreement regarding payments, etc.

I've had "discussions" with certain people in our industry about the automatic acceptance of client dictated terms and payment schedules. Their viewpoint being that if client A's practice is to pay in 120 days, and you want to do business with them, YOU need to adjust YOUR cash flow to accommodate them.

I disagree, and would like to offer it up for other views.

I see these people not as business owners but victims, because they don't understand their role and their rights,and they are dealing with more experienced people that understand it very well and are willing to exploit that position. The problem for the rest of us is, that in a field full of victims, it's sometimes difficult to conduct business.

I've found a few good articles on general business practice regarding B2B sales, Trade Credit and suggestions for getting paid on time. They might serve as useful primers for discussion:

http://en.wikipedia.org/wiki/Sales
http://en.wikipedia.org/wiki/Accounts_receivable
http://en.wikipedia.org/wiki/Trade_credit
http://www.entrepreneur.com/encyclopedia/term/82538.html
http://www.qlfs.com/html/offering_terms.html
http://www.qlfs.com/html/getting_paid_on_time.html

Other terms to look up are Merchant, Vendor, Net 30, Accounts Receivable, Universal Commercial Code.

As evidenced by the practices of every well managed business, Trade Credit is at the sole discretion of the vendor, and can be revoked at any time. You should not expect your plumber to fix your toilet without paying at the time of service. Your cell phone and cable tv provider make you sign a credit agreement and run a credit check on you before they allow you to pay at the end of the month. Those with bad or no credit get pre-paid plans.
In order to rent gear from VER, Bexel, or any other shop, you have to fill out a credit application, wait for your references to get verified, along with a credit report. If they don't check out, it's C.O.D plus a deposit.

Though trade credit can be a very useful tool to encourage business, and though some clients may expect it, trade credit is at the sole discretion of the vendor. While a client may issue an "offer to purchase", which may include certain terms, a vendor may accept or "counter offer", since the vendor has the right to determine their own sales policies.

I view trade credit to customers as an interest-free loan. In exchange for the privilege of being their vendor (in victim lingo), I'm loaning them money for a period of time with no direct return (interest) on that investment, and I bear the risk of not getting paid at all. Therefore, I require some confidence that the client is credit worthy.

In my business, before any new client is granted a credit line, they must fill out a credit application and complete a credit agreement, which must be signed by a corporate officer, in which they accept our credit terms. One prospective client refused - "We don't do that, we're XXX, and you have to agree to OUR terms and conditions" which were 90-120 days. Well, this client would be purchasing equipment from us, so we'd have a potential liability to pay the manufacturers before we received payment from the client, so I passed. Let another vendor with deeper pockets assume the risk if they so choose. I'm not proud of this decision, it's unfortunate really, but some vendors (potential victims) evidently let them get away with it

.

Some clients are marginal. They may pay some invoices on time and others late. I can hound them, as suggested in one of the articles above, but here's another suggestion:

One current client recently had a change of corporate policy that affected how invoices are approved for payment. Every invoice since then has been paid significantly late. I want to keep them as a client, and I'd like to offer them an incentive to pay on time, or at least get something in return for their extended use of my funds.

Our invoices do specify late fees, but I've generally had trouble collecting them. Instead, we will increase their rates X% for each line item, then offer a discount for prompt payment which would result in the original rate. So they'll pay the same rate within the Term period (ie:30 days), and an automatic premium on day 31, and it's the actual invoiced amount, not a late fee.

The concept of trade credit or delayed payment only works (for the vendor) if the vendor can be said to have leverage over the client to insure payment. The need for future services by the client is enough for some. For out of town or foreign clients, who can present no reliable future need for your services, the only leverage you have is the finished product, unless it is a live broadcast in which case you have no leverage at all after the fact.

Comments? Alternate views?

Marty Atias ATS Communications

Very informative post. Not sure if it really applies to my case. I am a freelance makeup artist. What I find in my situation/area is that most people who request my services do not want to pay at all. This is extremely frustrating.

I understand working gratis when you are just starting out in a creative field, however, I have been at this now for more than 10 years and my experience and level of talent warrants some compensation. Do not misunderstand me, I still work projects on a time for credit basis, but at my discretion based on the project.

For example: a photographer called me once to do a themed photo shoot. There would be 7 models, very detailed, editorial style makeup and styling. He would need me there for about 12 to 14 hours that day. I gave him my day rate and his comment to me was exactly this, “Why should I have to pay you?”

I explained to him that my coming to do makeup and styling for him for 7 models was work and that when I come to work I expect to be compensated for that work. During the conversation he revealed that each model was paying him $150 each to participate in the shoot, so I suggested that he pay me $50 for each model (which was about half of my day rate) and he was offended that I would have the nerve to take money out of his pocket.

Now this is only one experience. I have many more that are similar. The lack of compensation has now become a burden on my finances to the point that I have even been considering bankruptcy if things get any worse. I cannot continue to finance my business with no revenue coming in to support it. (To answer the question some of you may be asking – yes I do work a secular job, however, it is not a very good one. It does not pay enough to cover my living expenses and I have to help my elderly father with some of his bills out of that so it is like not receiving a paycheck at all)

What I would like to know is how do other freelancers out there get paid? How do you get filmmakers, photographers, actors, models, and other clients to respect your profession enough to realize that you deserve to be compensated for your work?

Doing makeup is one of the things in this world that helps keep me sane. The thought of having to give it up because I can not longer afford to do it terrifies me. Any advice that anyone out there can offer to help me turn things around would be greatly appreciated. I am not looking to get rich or make a lot of profit. I just want to be able to support my business and maybe myself doing what I love to do.

Thank you for listening.

Karen

I've run into people like that Photographer all the time. I would bet if you called him telling him you wanted him to spend a day photographing your work in progress for several models so you could show each step of your process - He would be offended if you also told him his work was going to be for free.

All photographers are not like him and If you have not thought about it Making a Small book of your best work on different Men & women with a rate card and some flyers for Leaving with Photographers, Agents, Castiong Directors & Theatres near your home- is a good way of building your "Brand" and your business.

Best Brian

Reposted (with Permission) a TIVA-DC posting from Marty Atias - ATS Communications.

Wow, the roar of silence on this topic is deafening. With so many freelance members, including actors, writers, graphics, etc., no one has comments? Interesting!

As someone who has been on both sides of the cheque, I am quite sensitive to the financial pressures of accounts payable and receivable. I must plead guilty (on occasion) of having cash flow issues. However, I've also paid my crew out of my own pocket when a client failed to pay me, because my obligation to my crew is independent of my ability to collect from my client, and my crew is not a party to the contract between me & my client.

The New York State Senate will be considering a bill (S21-2011), which has already passed the Assembly, called the Freelancer's Payment Protection Bill. It is being championed by New York's Freelancers Union (http://freelancersunion.org).

Among it's provisions are:
-Requires independent contractors to be compensated for their work within a reasonable amount of time, in accordance with a written agreement.
-Requires work terms to be defined in a written contract
-PRESUMPTION THAT THE TERMS THAT THE INDEPENDENT CONTRACTOR HAS PRESENTED ARE THE AGREED TERMS.

The Union has also drafted a Freelancer's Bill of Rights.

Are these measures good for independent contractors? Certainly.
Are they good for independent production companies? They will certainly reduce the uncertainty of receiving payments, and make cash flow (on both sides) more predictable and equitable. They will also more clearly define the scope of work and the limits of what is expected for the negotiated price.

Marty Atias ATS Communications

I have a comment, I concur ;-)

The Freelancer's Paymt Prot. Bill in NY which is supported, perhaps even drafted by, Freelancer's Union is a very promising thing. Maybe the idea will make positive waves across the country. On the other hand, I do kind of feel like the concept of "freelancer" connotes underdog. My interpretation is that a freelancer, similar to a sole proprietor or entrepreneur, is a company of one. This company of one might not have dedicated accounting, marketing, management, legal, or IT departments but they are still responsible for all those endeavors. I really think if freelancers would imagine themselves as a small business and consciously assume more responsibility for all the elements of a business then they might be more successful and have less need for such a "bill of rights." That said, I do appreciate and believe the elements in the Freelancer's Bill of Rights are positive statements.

Sincerely,

Mike M.
Ear of the Eye Productions
earoftheeye@earthlink.net

I will chime in and say that I am going through a non-payment situation right now. Even though I was booked through a well known agency in the DC/VA/MD area, I still have not been paid for a non-union job I did over 3 months ago. The agency says they have contacted the producer but have only gotten empty promises. The producer is responsible for paying the talent. I will probably never see that money.

Megan

You have choices if you decide to use them - Problem is Most actors will not - This allows them to do it again to someone else

This is From the Maryland The Department of Labor, Licensing and Regulation Website - It is Maryland Law but it has Contact info for our neighboring states. http://dllr.maryland.gov/labor/wagepay/wpremedies.shtml

While this is for Maryland - The basics are true Everywhere

The Department of Labor, Licensing and Regulation - Division of Labor and Industry http://dllr.maryland.gov/labor/wagepay/wpremedies.shtml


Remedies for Unpaid Wages - The Maryland Guide to Wage Payment and Employment Standards

En Español

E-Mail Address: ess@dllr.state.md.us

If you are an employee whose wages have been illegally withheld, you have three options under the Maryland Wage Payment and Collection Law (you may only choose one):

1.The Employment Standards Service (ESS), at (410) 767-2357 Fax (410) 333-7303 E-mail Address: ess@dllr.state.md.us. The Maryland Wage Guide to Wage Payment and Employment Standards, can provide information on wages and employment rights under Maryland law. On receipt of a proper claim for unpaid wages, ESS will conduct an independent investigation and work to collect any pay which is determined due. This may include taking the employer to court if the matter cannot be informally settled.

For those wishing to file a claim for unpaid wages, and for quickest results, it is suggested that a CERTIFIED letter RETURN RECEIPT REQUESTED, be sent to the employer stating the amount of money owed, identifying the hours and days or commissions this money represents, and demanding payment by a specific deadline (such as 10 days from receipt of the certified letter). It may help collection on the claim later to send the letter Certified Mail, as suggested, so as to receive back the green receipt proving the employer signed for and received it. In addition, a copy of this letter should be kept and later provided together with a claim form to the Employment Standards Service if the employer still does not pay.

2.An employee may file a lawsuit. Where a court finds that wages were withheld in violation of the Maryland Wage Payment Law, and not as a result of a bona fide dispute, the court may award damages of up to three times the amount of the unpaid wage plus attorney fees.

3.An employee may file criminal charges. Under certain circumstances, Maryland law imposes criminal penalties for an employer who deliberately fails to pay the wage of an employee without a valid reason, or provides employment with the intent not to pay.
*Note on Jurisdiction
Claims for unpaid wages must be brought in the state in which the work was performed. If work was performed in more than one state, claims may generally be filed in the state in which the employer maintains its business office-that is, the office where the employee reports to or was hired out of.

The following is a list of phone numbers of wage and hour offices in neighboring states and political subdivisions:

•Virginia - (804) 786-2386
•West Virginia - (304) 558-7890
•Washington, D.C. - (202) 671-1880
•Pennsylvania - (717) 787-4671
•New Jersey - (609) 292-2337
•Delaware - (302) 761-8200
•Baltimore City - (410) 396-4835
Federal, state and local governments are exempt from the provisions of both the Wage Payment and Collection Law and the Wage and Hour Law, but they must comply with the federal Fair Labor Standards Act.

If your claim involves non payment of overtime pay, you should contact the U.S. Department of Labor at 1-866-4US-WAGE.

Hi Brian, I am on board with you. We need new business practices. I am full time in this business as an actor and model. I work throughout the Balt/Washington/PA and New York markets. Timely payment is the biggest issue we face and not enough is being done to change it, It has become acceptable not to be paid for 3 months or more. How anyone can live with this kind of business practice is beyond my comprehension. It minimizes our time and work. I am willing to join forces with you, to be a loud voice to restructure the types of business practices that stop our business from being a respectable business. Please let me know if there is anything I can do.

Best wishes,
Lewis Marcus

Thanks for addressing this and raising the issue. I am often surprised at how little folks in this market seem to take issue with the growing practice of paying talent (which are essentially, freelancers) well beyond the 90 days. As I mentioned in my earlier email, I came from the Philadelphia market ... and NOT ONCE did I have to wait 60 days, let alone 90 days or beyond, for payment. I have been extremely patient with the DC area casting agencies/agents but my experience has been, they push the limits with what can be described as a reasonable timeframe to pay talent. I work in production as a full time profession, so I have experience on both sides of the "cheque" as well ... and the truth is ... I could never get away with paying talent or production crews after 30/60 days much less 90 days. I would have no business or production crews to work with.

Frankly, the way I see it ... casting agencies/agents need US as much as we need them. I think they forget that Talent/freelancers talk to one another on shoots. Some of the area casting directors would be surprised to learn the true feedback on their reputation. I have been on several shoots where now the discussion is "avoid getting gigs from this agency/casting director, unless you're OK with getting paid in 6 months." Yikes! I will admit ... I chose to experience it myself before reacting to the accusations ... and learned very quickly, most folks were right. As a result, I now think twice before I even accept an audition. And for most agencies, I don't think they can afford for talent/actors to react that way. It's their task/job to get you in the door, so their client as options. Not good, if you have talent choosing to not even come in for the audition, because they don't want to deal with you down the road when it comes to retrieving payment.

Again, I don't expect many folks in this market to see it as I see it. The practice is alive and well because folks in this market allow it to go on.

I would agree with the concept of the freelancer as a business of one. When writing or signing a contract, I think it's important for both parties to note when a payment is to take place. I've never had a problem receiving a payment in a timely fashion from a union job.

When there is no union's governance (such as on a print job), I've sometimes had my paycheck stuck in limbo, and so I've had to rely on persistence to get paid. When I've written contracts for freelance jobs, I always include the payment amount and the payment due date. It protects everybody involved.

Being shady about payments, not answering calls or emails, and any other unprofessional behaviors can affect people's desire to work with you again in the future. However, people will want to work with you time and again when you are professional and courteous in your business dealings.

Johanna S.