Clients Not Paying Vendors
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- d_rek
I've come into an issue where a recent client of mine has gone 60 days out from an invoice a vendor has provided to them.
Now my arrangement with the client was that I would coordinate any vendor interactions but billing would go direct to the client. Everything went good for this. I managed the vendor while the vendor billed the client directly.
Fast forward 60days from vendor's invoice date and vendor calls me being quite friendly about the whole thing but I can't help but think how this makes me look bad - after all It was my client.
I should note that I personally have had no problem receiving payment from this particular client. I'm thinking I should have just brokered the vendor myself, taken a cut and routed the process through me.
Anyone have any advice / stories / anecdotes on how to handle / avoid in the future? Just curious....
- jetSkii0
Someone is gonna have to pay....
- Continuity0
'I should note that I personally have had no problem receiving payment from this particular client. I'm thinking I should have just brokered the vendor myself, taken a cut and routed the process through me.'
I think that - in the interest of both process and future relationships - this is the way to go, going forward.
- monospaced0
Also, if you're going to handle vendor relationships, you have every right to charge an extra 5-15% on top of the vendor invoices.
- moldero0
when a client doesn't pay me, a watermark mysteriously appears on their file like magic. Then all of a sudden, for some reason, they decide to pay. Flash is awesome.
- that only works if you're building and hosting a sitemonospaced
- nopemoldero
- well, it sure doesn't work on print pieces that they've had for months.monospaced
- truemoldero
- capn_ron0
It's the best way for me. I am usually on a net 30 with vendors, so by the time I receive payment from the client I am able to pay the vendor and take my cut of the process. It is only fair to bump up the cost if you are spending time dealing with the vendor for the client.
- shellie0
Sounds like they're mismanaging their cash flow. That's not uncommon considering any agency carrying staff or even a skeleton crew.
You're completely right at that last statement. If it's your client, you route billing through your own company. If you're at the point where you're doing projects on a large enough scale where you feel you should route through legit and insured comany -- you should probably get yourself straight if you haven't yet.
I had a business arrangement implode and I'm still waiting to be paid months upon months of salary -- including all my employees. If you're in the states, you're just an unsecured creditor and if that company you're fuckin with closes, they're not obligated to give you anything -- and you cant sue a company with no money unless you like pain.
And what monospaced said -- you're missing out on your markup. Plus, you should at least be able to mark up 20%. And your vendor should be giving you a better deal for bringing them business to keep the overall client facing budget the same. If you're bringing in the business you should be getting paid for that relationship and yous should probably also have them sign a non-compete or give you your 20% on any other business they do with that client for the following year. If you're a good negotiator, you can add a sunset clause for following years to 10% and 5% decreasing over time. It's fair.
- btw, that impoded biz deal was a middleman situation like yours. Always remove the middle!shellie
- No offense if you asked me to sign a sunset claused contract I would tell you to take a hike, and non-compete are illegalsilentseven
- bjladams0
we run it all thru the co. get the mark up that comes with it.
we've also been asking for payment in full before any printing or products are made- nobody has object to this.
- noneck0
You should never run the vendor's billing through yourself. This is horrible, horrible advice that could easily bankrupt you. Why on earth would you assume the risk and liability of your client's billing?
What happens if the client stiffs you? Are you going to pay out of pocket for your client? If not, the vendor is still going to be pissed, this time at you. Besides, the other vendors usually have a much better ability to absorb the loss than you do, and are in a better position to go after the deadbeat client than you.
If we're talking about printing (which is most likely), most printers are happy to set up an arrangement where you get them to quote you a job and tack on whatever margins you want (10-25%, whatever you ask for). They'll send you a quote with your client's name on it, that you provide to the client. You get the client to agree, and you connect the print rep to your client. You let the printer handle credit checks, billing, deposits, etc. The client pays the printer, the printer delivers the job to the client, cuts you a cheque for your markup, and hands you a nice stack of samples from the job. This way you get to mark it up, but you don't have to assume any risk on the job, and everyone's clear about the relationship.
I've heard stories of freelancers and small agencies getting stuck with $40,000.00 of printing because the client bounced. Tough shit, the printer doesn't care. How much money could you afford to eat on a job if the client decided to skip out on you?
- whoah...good point...fuckmonospaced
- I've handled the print vendor on behalf of my clients several times and got lucky with accurate work.monospaced
- +1
though shellie's cash-up front works around that. (make sure the cheque clears.)monNom - had a buddy lose everything because of this exact practicejmilligan
- I stand corrected, sir.Continuity
- +1000 on this. DO NOT put yourself on the hook for the vendor costs, even if your going to make a little markup.Mr_Right
- d_rek0
noneck,
This is exactly how i managed this job. I always assumed it would be bad practice to route the billing through myself for exactly the reasons described above. I'm just one guy. If i got stiffed on even a couple hundred dollars that would set me back far to much. I'd prefer not to broker the deals.
I handled it pretty much exactly the way you described. I simply managed file hand-off to the vendor and some very minor oversight. I don't have any margins setup with my vendor because the business is infrequent for the time being.
Thanks for all the advice guys!
- ReggieBalls0
Great bat.
- maikel0
Gents,
As said before, there are not many options
a) all inclusive
You bill your client for whatever you do and outsource. That happen a lot if you are asked to print regularly or to buy ad spaces. If instead of a one-off you are doing several projects, it is likely that your client would prefer to avoid the hassle of 3 or 4 different vendors. If you go this way you bill whatever amount you feel like. the honest version is vendor+handling+risk (plus interest if they pay late). the obscure is a lump sum that 'covers all'.b) your client chose who to work with.
...and you just give to them a CD/DVD/FTP with what they paid for.Anything in between is trouble.
Examples of A.
I gave great rates to a few clients for printing through me as I could gather several jobs and send them to the printer altogether. Larger run, more colours, everybody happy. I used to pay the printer on monthly basis as I had credit.Not long ago I had to manage a digital campaign for a small client. Instead of having them paying to Spotify, Metro and a printer I gave to them all the quotes plus the hours for handling the vendors. The client had an account with me, and everybody happy.
bottom line, if you don't have much cash/credit or vendors that you deal with often, and you don't want to get tangled in tax payments, go for B, otherwise A always give you more business.
- lukus_W0
or
- rodzilla0
had this happen to me actually. I called the client and they had misplaced the invoice from the vendor. They also went on to say that they couldn't pay it, but since we had the billing sent directly to them we said to work it out with the vendor. Thank fully the vendor allowed them to setup a payment plan and got things sorted eventually.
I would call your client and let them know you are receiving phone calls from the vendor in regards to which job and how much.
- Yeah, I already did. No response from client. *le sigh*d_rek
- louisville slugger it is.rodzilla
- I know its your name, you don't want tarnished, but i'm certain this vendor has dealt with similar situations...rodzilla
- Yes, I'm sure you vendor is used to this. 60 days isn't really too long. Welcome to graphic design!Mr_Right
- Mr_Right0
I'm going to say something here based on experience that somebody may find helpful. I have been though the OP experience a couple of times. I have also brokered some printing on my work to get the extra markup. I realized pretty quick, as some of you have realized also, that I didn't want to be stuck with a huge printing bill if the client didn't pay for any reason. Here is the way to do it: Develop a good relationship with your printer(s) (or vendors) and when they quote a job for your client have them add your markup to their quote. Then when the job is finished and the printer gets paid the printer sends you a check for your markup. You can call it markup, finders-fee, a kick back or whatever you want, but after many years as a freelancer it seems to work the best.
I'll expound on this if anyone's interested.
- I see this has already been explained in an above post, cheers!Mr_Right
- DaveO0
I've never marked anything up on print. Always found it a bit dishonest for some reason. Place I worked once put 43% markup on everything, even hours for creative work billed internally.
- doesnotexist0
marking up print is standard. why shouldn't you if you have a reliable network of people who can get shit done? I know places that charge 2/3x production.
- d_rek0
DaveO,
I will markup depending on the client and the amount of vendor management involved. It's really not dishonest to markup print work - especially if you consider travel costs, time spent proofing and attending press checks and whatnot. The other thing i've done is to roll the markup into my own invoices that way the client only pays the vendor for their services.
- bjladams0
starting at the beginning of the year, we started asking for print work to be paid 100% in advance- only one person has objected and they moved on to screw somebody else over for about 10 grand.
also, i worked as a printer for 5+ years. the old man who called the shots liked it when designers would send thru the customer. he'd recommend a change here or there and before you knew it the designer had lost a client to the printers design dept. It's a shady thing, but seen it happen many times.
not that all vendors would do that.
