In this episode, Anne and Gabby talk collections. How to prepare yourself for a collections situation, what to do when someone doesn’t pay you, and how to nip it in the bud before even stepping in your booth.
With over 30 years of combined full-time VO experience between Gabby and Anne, only ONE client hasn’t paid.
Quick Concepts from Today’s Episode:
Bill your clients up front! This way you’re sure to get paid.
Use electronic payment methods to quickly receive funds. Only allow trusted clients to pay with checks.
Have your terms of payment in an opening email.
Vet new clients. Talking to someone on the phone is a good way to establish trust.
Build late fees in to your terms of service to encourage on time payment.
Share ideas with your own network ++
Referenced in this Episode
Direct links to things we brought up ++
Learn about Money Blocks
Keep track of your outstanding invoices with Freshbooks
Another good program to use is Quickbooks
Full Episode Transcript
VO: Today’s voices need to be more than just a pretty voice. Today’s voiceover talent has to be a boss. A VO boss! Set yourself up with business owner strategies and success with your host, Anne Ganguzza, along with some of the strongest voices in our industry. Rock your business like a boss. A VO boss! Anne: Hey everybody, welcome to the show, the VO BOSS podcast. I’m Anne Ganguzza, here with my lovely co-host, Gabby Nistico! Gabby: Hi, hi! Anne: And today, we’re going to talk about something that I think not a lot of people like to do as part of our VO business, and that is collections. Gabby: Dun-dun-dun! That’s been like our theme music here for a couple of episodes, I think. We are, we’re getting into all the stuff that people don’t like. Scary stuff! Dun-dun-dun! Anne: Therefore, hopefully, listening to this podcast makes it a whole lot less scary. Gabby: I would hope so. We’re not scary, I mean not usually. Not unless you’re in my house at 6:00 a.m. when I’m just waking up. Then it’s a little scary, but you guys aren’t privy to all that, so most of the time I’m not scary. Anne: Our intention is not to scare you, we’re here to help. So, yeah, collections, Gabby. I know for a fact I try to avoid having to get to the extent where we are having to really push people for money, push our clients for money if they owe it to us. But it is kind of a necessary evil once in a while when it does happen. I’d like to start off by saying, let’s try to avoid having it happen in the first place. And I think that there’s some steps that you can take prior to establishing a relationship with a client that can help you to not have to go to that extent to get your money. And that is to kind of vet your clients and, I’m going to stay, establish a report with them because in this day and age where we’re all communicating via email, it makes it really hard sometimes to make connections with people. Because lots of times, things can be misunderstood. I would say, make sure that you have your payment terms up front with the client. Talk to the client if it’s possible on the phone. I always like to do that because I’m always saying to them, okay, here are my payment terms, and now that I know that you’re a real human being, because I’ve talked to you on the phone, it makes it a whole lot easier. And I think it makes collections a whole lot easier. Gabby, what do you think? Gabby: Absolutely. I think you’re right, the best-case scenario with collections is absolutely to avoid having that happen in the first place. And yeah, there are all sorts of things that you can do and should do to prevent that. I don’t necessarily feel the need to speak to a client, but there’s a very distinct point in my communication with someone, usually via email, where the conversation obviously turns to money. But not just the money, because we’ve already negotiated the rate, it turns more to the logistics. And at that point, there’s a couple things I do. The first is, I always, always, always require a client that I have never worked with before to pay up front. Anne: Yes, excellent. Gabby: If the job is really sizeable and it’s going to take a long time to complete, then I might ask for half to begin. But most things, it’s the full job up front. And the other thing that I do is, in that same email, I ask them for all of their company’s pertinent information related to billing and of course a contact name and phone numbers and address and literally, it’s like a form that I send them. And they fill it out and send it back to me. And one of the things that I ask for on that form is a credit card to hold in the event of a failure to pay. Anne: I like that! Gabby: Yeah, so there’s some very effective tools there. Because one of the things you’re doing when you send that message, I rarely have to resort to charging someone’s card. You’ve kind of scared them just by asking for it. Because you’re making it clear that you mean business, and yeah, if they stiff you, you’re charging them. Anne: I’ll tell you what, I’m right there with you on the payment up front, and for a new client, exactly perfect is that if you’re dealing with a client and you’re not familiar with them, you’re not familiar with how they pay or even if they’re legit, I always require payment up front. And that’s actually written right into my payment terms. Gabby: Yep, mine too! Anne: And it’s payment terms up front, in full. The other thing that I’ll do for a new client is I’ll have them pay me via an electronic method so that I can get the money fairly instantly rather than allowing them to pay by check. Because a lot of times, they’ll want the job done before they can send the check or cut the check. Or if it’s a large company, then usually, there’s another contract involved. That’s when I’ll accept checks, or if I’ve spoken to somebody on the phone and the company has a fairly legitimate reputation, I will accept a check. But for any new clients that I’m working with, especially if they’re overseas, too, I require payment up front, in full. And then literally, at the very end of my payment terms, I’ll say other payment options available upon request. And what that does is it allows people, if they have a different policy or the company has a different policy on payment, they can at least approach me. It says that I’m available for discussion. But, I can’t even tell you how many times I’ve asked for payment up front and I’ve gotten it. Gabby, it’s insane, you ask for it and you get it! I don’t think that I’ve ever had somebody not pay me up front, which is really cool. Gabby: I’ll tell you, in my experience, I would say about 80-90% of clients will abide by the payment up front term. Occasionally, it’s the larger corporations, it’s the really big companies that literally can’t make a payment up front. Anne: They need to have a PO or something like that. Gabby: Yes, but in those cases, there’s so much check and balance, I don’t feel in any way concerned that I’m not going to be paid. So I don’t worry about it. Those are exceptions that I’ll make. Anne: Exactly. Gabby: I’ll tell you something that’s really funny, so you and I have what sounds like almost identical processes to avoid collections. I have been criticized for years by various voice actors for my demand, shall we say, of payment up front. And, it’s sparked a lot of controversy in the past, of people going, oh, that’s impossible, nobody will abide by that, you can’t do that. Yeah, you can! Anne: Sure you can! Gabby: Yeah, you totally can! And it works, and some of the most successful voice actors who are running their businesses really well will stand behind this, like Anne, and tell you that it’s totally doable! Anne: I honestly had it happen last week. I had somebody contact me in a rush, saying oh my gosh, can you please, I need this today, can you do it? And I said well, here are my terms. Here’s what I typically charge for this job and I require payment up front. No problem, I’ll pay you in a minute. Like literally, what’s your email address for PayPal? And I got paid before I even stepped in the studio. Which is great! When people want you and they want that job done, they will, like I said, I’m amazed at the amount of people that actually do pay up front. And you’re right, with the larger corporations, as long as I’ve spoken to somebody and I know that they’re a big corporation and we’ve been through a process with, usually I’ve had to send them either some information about me or sign a contract. Then you’re right, I understand that. Gabby: The other thing, too, is I feel pretty good anytime a client beats me to the punch and asks for a W-9 and asks for tax papers on the front end, I feel pretty good about that. That tells me they know what they’re doing. Anne: Exactly, they’ve done it before. Gabby: So Anne, we’ve said a couple of things now, both of us, repeatedly in this episode, which is, in our payment terms, in our invoices. So let’s talk about that a little bit. Because I would venture to say that a lot of folks don’t have payment terms. And really don’t understand what that means. So what is that for you? Anne: Well for me, it’s an actual paragraph that goes right in the very first email or point of contact. The first form of contact that I have with a client is my quote, what it entails, what my deliverables are, and there’s just a paragraph that says payment terms, and it’s pretty stable. I say the same thing pretty much every time. For a new client, I’ll take off that line that says I accept checks. So I do customize it per client, but if it’s a new client, I will take off that line. Payment terms, payment in full, payable too email@example.com via PayPal is preferred and greatly appreciated. So, notice how I say that. And I will tell people too, if I have the opportunity if I do speak to them on the phone. A lot of times, I’ll make that reason to call them on the phone for clarification of the job. So, I’ll just say, please feel free to call me with any questions or if I can provide you with more information, or like you said, I think it’s very important to ask for the contact information up front, I say for my accounting purposes or invoice purposes. Gabby: As do I. Yep, same thing. Anne: And that way I have a name and I have a phone number. I get really suspicious of, sometimes people will send me requests for quote, and they’ll have a name but they won’t have a company in their signature and they won’t have a phone number. Gabby: Or they don’t have a signature, that always freaks me out. It’s like, who are you? Anne: That freaks me out. That’s when the radar goes up and that’s when I really demand payment up front. Or I say, hey, I’d love to discuss the details, let’s talk or let’s chat, or, please provide payment. If they provide payment right away, then I’ll just say, oh by the way, can I get your contact information for my records so I can send an invoice? Gabby: Yeah I blame it on my accountant. Anne: Yeah, exactly. Gabby: I go, oh my accountant needs all your contact info. Anne: So payment terms, to me, is having that already there, having that paragraph written. What about you? Gabby: Well, it’s pretty much the same. Mine is actually in my invoice. It’s the note section or a paragraph that’s in my invoice that details exactly what you said, as well as terms for existing clients and repeat work, being that it’s 30 days net. So, I tend to not modify it. But what I will do is try to beat the client to the punch of, once we’ve got everything agreed upon, let me have your information so I can send you a proper invoice and that will give you your payment options. Anne: I’m sending an invoice– Gabby: And they’re usually happy with that. Anne: Yeah, send an invoice immediately after I’ve done the recording, if not right away, I’m sending an invoice. And so, when it gets to the point where, let’s say, somebody, net 30 days. Alright, so let’s talk about what happens with net 30 days if it’s 20 days coming, 25 days, you haven’t really heard anything. What do you do, Gabby? Gabby: I tack on a late charge. My billing system is automatically set up to start accruing late fees at 30 days. Anne: After 30. Gabby: Yep. Anne: And that’s great, and that’s in your payment terms. Gabby: Yep. Anne: Now I have some larger corporations that will specify to me up front, okay, here we go, we’re putting you as a vendor. Here’s the contract, by the way, our net pay is, I have some that are 45 days, I have some that are 60. And you know what, if I get enough recurring work from them, I’m okay with that. Gabby: Oh yeah, I’ll waive fees in situations like that, or if I know what to expect. But if I don’t, then they’re going to get charged. Anne: So what do you charge for late fees? Gabby: I think mine right now is 5%. It’s 5% of the total. Anne: 5% of the total every how often? Gabby: Every 30 days until it’s paid. It’s 30-60-90. Anne: That’s great, and I think that’s a great thing to have in your payment terms. That’s actually something that I don’t have in my payment terms right now. Gabby: Really? Anne: Honestly, gosh I’ve been in the business full-time now just over 10 years. I have never had a client not pay me. I’m very happy to say that. And it’s really interesting because there are some people I see in the forums and everybody’s like, what do I do, this client hasn’t paid, or I haven’t heard from them in months. I honestly have never, and that’s a good thing, but I also think that it has a lot to do with vetting the client and putting those payment terms up front. And understanding that if you don’t hear back from somebody via email or you’re not receiving a portion of that payment up front, then that may be something that you want to reconsider, perhaps, doing that job. Gabby: Well let’s talk about a couple of quick things here, so first is, have your bullshit meter on high at this point in your dealings with a client. If it doesn’t look right, be prepared to walk away because if they’re providing limited information, if they don’t appear to be conducting themselves as a professional, expectations like we were just talking about, if I don’t see a signature, things of that nature. That’s data that you can use to pretty well determine whether or not this person is legitimate. And that’s going to be what pushes you further into the direction of asking for that money up front. Anne: Absolutely. Gabby: Now, Anne, you talk all the time about money blocks. Anne: I do! Gabby: Why do you think it’s so hard for people to just ask for money up front? Anne: Well, I think a big part of it is a fear of reject