Gordon Woolf's Blog

Make sure you get paid - redux

Getting paid is the final stage of any kind of freelance work -- or of running a small business of any kind -- but seems to be a particular problem in publishing.

I have already written on the subject in a blog item you'll find here, but it is well worth revisitng

There are several necessary steps, and many of those go back to the first ones when you are in the first stage of getting and accepting a job.

Such steps include checking the details of who you will be working for. Do you really know who they are? Try a search on the Internet: do they have a web site, does it give their actual address and is there information on how long they have been in business?

But I'm getting carried away giving my own interpretation of what to do when there is a good guide by a longtime copyeditor, Katharine O'Moore-Klopf, who has been successfully overcoming the problem of "How to avoid getting stiffed by clients" for many years.

Read it before you take on your next client.

Make sure you get paid on time

Being successful in a small business is not just reliant on making a profit on whatever you sell, whether it is goods or services. It relies also, and perhaps more importantly on getting paid for those goods or services.

I was surprised yet again this month to come across a small business owner, in this case a freelance designer, who had not thought to set out clearly just when he expected to get paid and ensuring that was understood by his clients.

He wondered whether he should offer a discount for payment at 10 days or 30 days. That, I suggested, would just mean he would be giving a discount to his current prompt payers and encouraging others by suggesting he was prepared to finance their debts to the extent of 30 days which could be attractive compared to bank overdraft costs. He also needed to make sure that he got invoices out immediately a job was done, and certainly not wait until the end of the month (and sometimes into the next month) as he had been doing.

Long ago I established a simple system with my clients: no job would be started until the previous one had been paid for. I did have a couple of exceptions for weekly jobs but on those there was a date for payment each month which I had got from the client and no future job would be started if that date went past without payment.

When you have your own debts it may seem hard to seemingly pass up the chance of more work, but if you are offering fair value in what you do you will find that clients will keep to agreed terms when it is in their interest. Those who do not may not be worth working for; it is no good doing work for which you will never be paid, or paid so slowly that extra costs in chasing payment eat away at all the profit and do not return your own expenses in doing the job.

Part payment should be normal in advance on first orders. In my experience as a publisher, most book printers now work on half payment in advance and the rest before the finished job is despatched. One large printer told me recently that is what saved them in the recent global difficulties.

Faced with such payment terms from printers I can understand that some publishers will be trying to delay payments to other suppliers ... will you be one of those?

How to work out what to charge for ads

Magazines provide a fascinating problem for anyone interesting in the mathematics of costing production. That's because there are so many variables.

Think of this: you plan a new magazine and you follow the usual practice of giving discounts for larger advertisements. Or maybe you work it out the other way: $500 for a full page, $260 for a half, $150 for a quarter, $80 for an eighth-page. Now you reckon that most of your ads will be small sizes, but then in come the orders for full pages and someone asking what's your discount for a double page spread (a "truck" they may call it). Instead of celebrating you suddenly realize that instead of getting upwards of $650 a page, you are giving discounts below $500.

That truck is driving straight through all your cost estimates, accompanied by a dozen Humvees. You may save a little on the time of putting one ad on a page instead of placing 6 or 8 little ones, but you may also find that the advertisers or their agents are ultra critical on proofs and the quality of the final job. Then you realize that those full page advertisers placed orders for 3 or 6 or even 12 months and your revenue is disappearing fast. Your costs may be going down a little, but they'll still want to keep changing their copy.

Fortunately there is a calculator around to help. The Adrates calculator is not completely free - it comes as a free download with copies of How to Start and Produce a Magazine or Newsletter and is an Excel spreadsheet that lets you do all those what-of calculations before you start telling people what your rates are (or helps you work out what they will have to become if you already have a publication).

Enter your suggested full page rate and the percentage extra you will charge for smaller ads and the discount you will give for series ads. Guess the percentages you may get in series bookings (you can play around with all these figures as much as you like) and the spreadsheet will give you a guide to what your rate card might look like.

Then, and this is the clever part, it will tell you, based on what percentage of pages you intend to devote to ads, how many pages of ads you will need. Then you can enter all kinds of combinations of the sizes they might be. If you go over the total it will tell you and it will give a cumulative total as you enter the numbers of ads.

Finally it gives you the total income at full rates, and then, the really important figure: based on your previously entered proportions of repeat ads, it gives your likely revenue per issue. And that is the figure which may come as a shock.

Of course you can then work out what happens if you get an extra full page. Sure, the revenue will shoot up but there is the calculation this spreadsheet does not do for you: what effect does it have on your printing and other production costs (especially if it takes you into the next postage category and you have a lot of mail subscribers).

This isn't a magic solution, but it will help with calculations that every magazine and newsletter publisher has to do at some stage, even if it is on the back of an envelope.

The book is available from Worsley Press or from Amazon, at US$26.95 and there's a lot more help than just this spreadsheet.

But first, have a look at the Adrates file (Download Adrates) which shows how the spreadsheet works.

 

Simple and free invoicing

I download and try a lot of programs, most of which are quickly discarded, but one I came across the other day is a simple invoicing program that keeps records of invoices and payments, can output statements and keep records of clients simply by extracting their details from the invoice you type. There's nothing that is not in Quickbooks or MYOB (and a lot that they have that is not here) but for most people who run a small business from home, those are probably overkill, and this has the advantage of being free, though you do have to register it. It seems to come from New Zealand which is probably why it picks up the country settings for dates, currency symbols and even the tax format (GST for Australia with 10% as a default). You can also set up items which can be goods or services and even multiple levels of pricing. The program is called XS Invoicing and it is effectively a free sample of what can be achieved with a general business program (available for several hundred dollars) that could provide a full set of customised business management and record keeping tools. Find it at http://www.development-x.com/ Now for the one criticism: if you are running your display at 96dpi you'll see nothing wrong but if, as I do, you run it at 120dpi to give better general Windows menu text sizes on a widescreen, you'll see some of the displays in XS Invoicing with text which overflows their surrounding frames. I sent an email to Development-X Ltd and next day had the answer -- change the dpi setting: Their reply: "Go into Start>Settings>Control Panel and select 'Display'. On the displayed panel click on the 'Settings' tab and then the 'Advanced' button. The DPI Settings should be 96. I suspect yours will be 120." The only problem with doing that is that my menu settings in most Windows programs became tiny as did the listings of folders and accounts in Thunderbird. Overall I've decided that I do not need XS Invoicing to the extent that it is worth a day spent readjusting Windows advanced display settings, but if you do not have Quickbooks or MYOB this could be all you need.