The following advice is specific to Australia. Most Western countries have similar structures and the broad principles are similar. However, you should consult your own advisers for specific information.
One of the best parts of finishing a photo shoot is that it's time to create an invoice and get paid. This is not a difficult process and the legal format (as required by the tax office) for the invoice was discussed in the previous issue.
Probably the best way to do invoices regularly is to use a simple accounting program like MYOB. MYOB allows you to create your own custom invoices and while the process of creating the template might be a tad laborious, once finished you can use it for ever and a day.
One suggestion for your invoice is to import your business logo and other details onto a plain paper invoice (as permitted by MYOB), so you can simply load plain (or coloured) paper into your printer and the complete invoice will come out the other end.
The best part about using MYOB to produce your invoices is that in the process you are doing your accounting work as well. MYOB calculates the GST, enters the income to your accounts and also lets you keep track of who has paid you - and more importantly, who has not!
In the photography industry, there is a wide range of payment terms. Payment terms refers to how long your client has in which to pay you.
In wedding photography, it is usual for the couple to pre-pay for the wedding photography, at least to the extent of a minimum order or basic package. Often they pay a fee when making a booking to reserve the photographer for the day (non-refundable unless the photographer books another wedding). Then by the time of the wedding, or perhaps a month before, they will pay the balance of their package fee. Many photographers consider it essential to be paid before the wedding because afterwards it can take a long time (all the money has been spent on the honeymoon!)
After the wedding, a larger album may be purchased and photographers usually require 50% of the extra fee to be paid up front, with the balance paid on collection of the album.
Note, not all wedding studios work this way. This is just an ‘average' situation. You're free to set up systems that suit your particular market.
For portraiture photography, most photographers charge very little or nothing for a sitting fee. Then, when the client is shown the photos, they pay 50% of the order up front and the balance on collection of the photographs. This ensures you get paid sufficient to cover all your costs of production up front.
Note, some photographers provide payment plans and lay-by arrangements, or they arrange for the client's credit card to be automatically debited over a period of months. This can help clients who love your work to afford it too.
Advertising, corporate and commercial photographers don't fare so well. They are generally dealing with businesses that expect to be given 30 days in which to make payment. Many photographers can find themselves waiting considerably longer than 30 days, up to 120 days with some slow paying advertising agencies. While this is not an ideal situation, it can be handled once you've been in business for a period of time, as long as you are constantly being paid (the cashflow evens out).
For larger jobs, say over $5000, many commercial and advertising photographers now ask clients to pay 30% or 50% of the fee up front to cover their cost of materials, studio hire and so on. Most clients are used to this type of request and you shouldn't be backwards about stating your terms of trade.
Magazine and editorial photographers dealing with publishers usually slot into a system where they are paid with all the other contributors at a specified time after publication. However, the larger publishers are usually quite regular in payment - assuming the editor remembered to give your invoice to the accounts department.
Often when dealing with larger businesses your invoice should be addressed to the person who hired you because they will first have to authorise payment. However, this varies from business to business and you should ask your client how they would like you to handle this.
While different industries and businesses have their particular ‘systems', you shouldn't feel backwards about asking for something different. Often wedding or portrait photographers when doing a commercial or advertising shoot have asked for payment up front - as they normally do for domestic clients - and they have been paid. Often it's a matter of negotiation.
There is nothing to stop you requesting terms like 7 days or 14 days instead of 30 days, but some big businesses are set up to pay accounts once a month and so you either accept this or don't work for the client.
Wedding and portrait photographers can have finished albums or portraits sitting in their studios for months waiting collection. Advertising and commercial photographers can wait for 60, 90 or even 120 days to be paid. However, while all businesses will experience bad debts at some stage, there are things you can do to reduce bad debts.
The easiest thing you can do is to be active. If you have wedding albums or portraits waiting collection, call the client. Ask them politely when they'd like to collect the work, offer them alternative payment arrangements, impress upon them the value of the images.
Commercial and advertising photographers have to deal with large companies and the faceless accounts payable staff. One way around this is to use your contact in the company to speed payment through (but you need to do this with some diplomacy). The usual way is to send out a statement.
A ‘statement' is a summary of all the invoices you have sent the company (it might only be one), stating the date of the invoice and the date that payment was due, and a comment that payment is now overdue and you require payment immediately. MYOB will produce statements automatically which can be posted out once a month.
However, a statement is easy to ignore. The best way to ensure payment is to be on the telephone regularly to the accounts payable staff and quiz them about payment. Ask them to nominate a date and then if payment is not made on that date, ring them back and remind them of their undertaking.
MYOB can produce a debtor report that will make it easy to keep track of the people who owe you money.
If you're an AIPP member working in Australia, you can get extremely good merchant rates (the fees the banks charge you to operate a credit card facility and take payment by credit card from your clients) through Westpac. Just mention you're an AIPP member. Similar arrangements are available with other professional memberships in other countries.
Although a credit card transaction will take from 1-5% of the transaction, the advantage is that at least you get paid in a timely fashion because often our clients simply don't have the cash available, but they do have a credit card!
Offering credit card services can be a great asset for a small business.
The information in this article is general in nature and should not replace personal advice given by your own legal and financial advisers.