Wednesday, October 1, 2008

Growing Pains: Don't Become a Debt Collector

Several lines from an email I recently received from one of my photography colleagues worried me to the core:

"I'm having trouble with one of my clients...they expect the work done on their terms and expect the photos before payment. So, I'm holding the photos ransom. I've become a collector, and I hate it."

One of the most difficult things to deal with for any business is securing payments. Because of that, I've been requiring clients to pay before I start shooting. Clients must pay half of the shooting fee to book me, and then pay the rest before I actually take my camera out the day of the event. Most people haven't had an issue with that once I explain to them why it is a necessary business practice (I think it helps that all of my work has been from referrals as well, so others have vouched for my work ethic). Even my business management instructor Jim Turley told students he hates having to chase people down for payments. So I asked Jim to share with me some strategies for remaining a business owner rather than a debt collector.

JIM SAYS: "Get full payment before the event.

Once an event, especially a wedding, takes place and the total cost is
known (weak budgeting on the part of the bride and/or mother - not
unusual) the motivation to pay in a timely manner can wilt.

If a wedding photographer is providing an album or DVD, then
definitely do not release any photos, even on Pictage or any other online hosting site, until the bill is paid in full. But this should be a last resort if monies are not collected prior to the event.

Businesses that typically carry accounts receivable (few today, since most require credit cards) build in a cost for collections. Photographers are unlikely to do this. And the cost is not only in dollars but in time it takes to pester your client for unpaid balances. Add to this the brain-damage of wearing a bill collector's hat, and the cost is even greater.

An up-front payment is a sign of good faith on the part of the client, but more importantly allows a photographer to make the reserved date unavailable to anyone else. What could be worse than reserving a date, which may be a popular date, and then not getting paid or paid-in-full? Not only does a photographer suffer from losing anticipated income, but she/he was prevented from booking that date for someone else!"

Jim also recommended that if anyone is interested in allowing clients to pay by credit card, then they should check out PayPal, which has a no-monthly-cost plan. In the early stages of a photography studio, Jim explains, owners need to be aware of fixed costs, even when it seems small such as $20 per month. Even established studios should think twice about monthly costs since it's not wise to take on fixed costs that yield no benefit certain months.

If any of this information has been helpful and you are in the Denver metro area, you should take Jim's course "Passion & Profits: Managing Your Photography Business," offered through Illuminate Photography Workshops. The next session starts Oct. 22 and runs for $199.


Mark said...

All good points - but I also think from the question of your friend that started this, it's important to realize that in a business/client relationship - the business sets the terms. A client should be either accepting the business terms or finding another vendor. Oh how I wish citibank would give me the interest, line of credit, and no payments for twenty years like I'd like them too.

If the client continues to push their terms, then it's time to let that client go. One of the toughest things for a small business owner to do is to stick to their business practices even if it means losing a client.

Sheba Wheeler said...

I agree with you Mark. I don't know what was stated in the contract, but I know that my colleague surely had everything squared he has always been a wealth of information for me when it comes to protecting my own business.

I think that's why it was so troubling to hear he was having difficulties with a just made me worry that if someone as put together as he is when it comes to business can have issues with clients like that, then I certainly can too (since I'm still so new at this)

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