‘You’ll Get Paid, When We Get Paid’ – 5 Ways To Avoid This Trap

October 5, 2016

Have you ever had a client say that won't pay you until they're paid by their client? Learn 5 techniques for avoiding this issue

Your Client’s Cash Flow Is Not Your Problem

Does this sound familiar?

‘Yes, we received your invoice and we’re sorry that we’re late on payment, we’re just waiting for our client to pay us before we can pay you,’

Unless you are brand new to the production/post industry or have just been incredibly lucky, you’ve undoubtedly heard this phrase or a similar one, dozens of times.

Over the course of my career, I’d say this is the number one reason clients site for lengthy delays on payment.

Over the past few months, at industry events or just grabbing some beers with local colleagues, I’ve been hearing about this kind of thing happening more and more – and it’s extremely frustrating.

Of course, it’s frustrating to the person it’s happening to, but I think it’s also something our industry on a whole should be frustrated with and work to avoid.

I’ve been thinking about the issue of clients not paying until they’ve been paid by their client all summer and as I’m prone to do, in this Insight I’d like to present 5 ways to mitigate or hopefully avoid this situation altogether.

Terms Are The Root Of The Problem – The Credit Card Effect

As Patrick and I have both written about, one of the problems with our industry is that extending terms to clients is standard practice.

Patrick’s default position is to just not offer terms and get paid prior to releasing any materials.

I understand that thinking, but I’ve also advocated many middle approaches including doing credit checks on clients (not has hard as it sounds).

With that said, the underlying reason that clients think that they can take the ‘not until I’m paid’ stance are terms are seemingly everyone in our industry provides.

Terms provide a pad, and to a large degree, freedom for the client to not feel stressed about being timely with their payment.  Or said slightly different, delays the immediacy of payment.

This issue is societal – not just for us lucky postproduction practitioners!

Really craving that amazing new piece of gear?  Don’t have the cash on hand or in your bank account?  No problem! Put it on a credit card and pay later – you’ll probably have the cash at some point in the future, right?

I like to call this phenomenon the credit card effect. We’re conditioned that if we don’t have the cash to pay for something we can ‘delay’ payment by putting whatever product/service we want on a credit card and pay later.

Of course there are those that use this ability to their advantage and do so responsibly, but of course, there are those that don’t.

Understanding the credit card effect psychology is a key way to avoid the client paying you only when they’ve been paid trap.

#1 Always The Agreement!

I get it, I sound like a broken record in many of these business articles, but its seems to me that many payment issues could be headed off at the pass with a proper agreement with a client.




Specifically when it comes to the issue of a client not paying you until they’ve been paid, call out that excuse as not acceptable in your agreement with the client.

Here is that section from the client services agreement for my company:

‘Client agrees that they are bound to payment of services as described in section 4F, and payment shall not be delayed, interrupted or excused based on the availability of funds from client or based on the availability of funds to the client from a third party’

This clause basically says that the client can not use the lack of funds or payment to them by a 3rd party as an excuse for not paying their invoice!

By the way, section 4F in our agreement is where we spell out acceptable forms of payment, how interest accrues with late payments, etc – all of which I’ve written about previously (see my comment in an article from Pat).

The point is: don’t allow lack of funds either on hand by the client or via payment to them via a 3rd party be an excuse for not paying you.

Of course, unless you’re ready to enforce this part of the agreement there is only so much you can do, but reminding a client that they’re bound to an agreement and that they agreed to this clause (or however you want to put it) often avoids delay on payment especially if your agreement also clearly spells out the steps you’ll take to recover monies owed to you.

#2 Start Taking Credit Cards Now!

I used to think of taking a credit card as last ditch method to get payment from a client.

These days, I’m much more proactive about advocating their use to my clients.

Why?  The Credit Card Effect I mentioned earlier.




This summer I dug deep into my accounting software and found a couple very interesting pieces of data for the past few years:

  • In 2014, 84% of our jobs that were late paying (greater than 30 days) were for jobs in the $4000-$6000 range. While I technically had the ability to accept credit cards at this time I did not.
  • Of that 84%, the average payment was made 51 days after sending an invoice.
  • In 2015, we had a similar late rate (76%) again also occurring in the 4k-6k range but at 35 days after sending the invoice, I sent another email to the client offering the option of a credit card payment. As a result, my average payment time fell to 38 days!
  • In 2016, I started to accept credit card payments on all projects and offered it as a payment option when initially sending the invoice (I still take checks of course)  In the 4k-6k budget range the late rate so far for the year has fallen to 7% and average payment date in this project range has also fallen to 22 days!

So what did I learn?

The 4k-6k project budget has over the past few years been, by far, the biggest perpetrator of late payments – doing further analysis, this sort of makes sense as most of the projects we do in this range are indie docs & shorts – projects that are always tight on budget and cash.

Next, I learned that by accepting a credit card payment when the invoice had gone ‘late’ I was able to dramatically cut my average receive date by almost 2 weeks!

Finally, and most shockingly, I learned that by initially offering the ability to accept a credit card for payment I have so far (and almost unbelievably) been able to cut late payments for this budget range by 69% and been able to cut my average payment date for this budget range to a mere 22 days!

I suppose it’s always possible that I’m just working with more reliable clients, but I think the numbers speak for themselves.

With a plethora of online options including services like Stripe, Square, PayPal, Intuit Payments and others you really have no excuse not to accept credit card payments.

All of these solutions have mobile processing too – so if you’re a freelancer swipe a card before you leave!

Even better, many accounting solutions have the ability to automate payments – for example when I send an invoice via QuickBooks (my accounting software of choice) all of the details of how a client can pay via credit card are in the email (as well as ACH transfer or check).

Member Content

Sorry... the rest of this content is for members only. You'll need to login or Join Now to continue (we hope you do!).

Need more information about our memberships? Click to learn more.

Membership options
Member Login

Are you using our app? For the best experience, please login using the app's launch screen

1,200+ Tutorials, Articles, and Webinars To Explore

Get 7-day access to our library of over 1,200+ tutorials - for $5!
Do you like what you see? Maintain access for less than $5 per month.

Start Your Test Drive!