As a small business owner myself here in Denver, I have my hands in virtually every facet of my business. Not only do I participate in the advertising and marketing elements of creative, strategy and online, but I have to oversee accounting and invoicing, which isn’t something I really enjoy doing, to tell you the truth. But it is part of the gig.
Usually, an advertising agency such as mine addresses billing and invoicing as any other marketing agency would. We ask for ¼ to ½ of the project fee up front prior to starting any work. This isn’t due to a lack of trust or as a form of punishment, but as many marketing agencies will attest, it is to ensure the client has some skin in the game. If a client already has paid half of their fee, they feel obligated to move forward with the project quicker than they may without any payment. Have a chat with other advertising agencies and I am sure they have stories of clients that put their marketing and advertising campaigns on the back burner while they focus on operational, production or human resource issues.
The additional reason we never really talk about for a deposit is non-payment. If you are in business long enough, you will inevitably experience this unfortunate episode. So what do you do when this happens? Marketing agencies have the luxury of a wide variety of clients. We have clients that work project-to-project and ones that are on retainer. Most of Encite’s client base is on a project-to-project basis, so we must walk a fine line when a client doesn’t pay their bill. We never want to get into a confrontation that may lead to the clients’ unhappiness. The reason being is: people change professions frequently and take their marketing agency with them. So offending a client could be detrimental to future revenues. BUT there is a time when enough is enough, which brings me to this example I ran across on the web.
A web designer in Europe worked on a website for a chain of fitness centers in California. When the company decided (for whatever reason…we aren’t judging) to not pay him, he took over their website posting copy that told the story of the fitness center’s non-payment. I can understand the developer’s frustration, but I don’t know if this is the strategy I would have taken. Not only is he opening himself up to litigation, I think it is a bit unprofessional, thus hurting his own brand. I would love to hear what you think. Did he do right? Full article here.
President, Encite Marketing