Credit checking your clients explained:

You and your Agency are giving the Client credit, you are allowing them to pay you later. Just like when you buy something on a credit card or hire purchase.

So how can you be sure they won’t run off with your artwork and not pay? Here we explain the steps that we take at Accounts Admin to mitigate those risks:

We make sure that all Clients complete an application for credit form (AFC) and we take out credit checks in advance of your job commencing. The AFC form also gives us details of who their current suppliers are and the full relevant accounting details, which enable us to see how credit worthy they are.

From this, we set a credit limit with the Client. That means the total amount they can borrow, if they go over that limit, they can’t place any more orders until they have paid. Just like with a credit card, we set the limit low to start. If a client pays late on occasion, we may reduce their credit limit because it may be an early warning sign that they have cash flow issues that could lead to insolvency.

If the client is a small business or an individual, we often ask for payment in advance.

We look after dozens of creative clients like your agency so we know pretty much everyone. Even if it’s the first time your Agency may be working with someone, it is likely that we have a record of them and a prior relationship.

We encourage your Agency to split jobs into sections such as signature of contract, roughs and final artwork. If the client has not paid the ‘signature of contract’ invoice by the time you are ready to deliver the final artwork, we can put the account on stop and ask you (via your Agency) to withhold the final submission.

We will also reduce an accounts credit with one agency if we see they are slow paying with another. That stops Clients from ordering a little from each agency, so they spread their credit around. Just like someone maxing out on all their credit cards. It pays to be linked up.

Some clients have negotiated longer credit terms, these are detailed on your portal against the job. Some clients do always take longer, your agent should give you the heads up in advance. We know who the culprits usually are.

We have a great legal escalation protocol for bad payers as a last resort that leads to the removal of copyright. This is a powerful tool when chasing for your money. It has further leverage than just litigated against a bad debt such as issuing cease and dissect notices on the Client’s customers. We have, on occasion, used bailiffs. This is all at our cost.

As a result we get very few bad debts a year, it’s as low as $150 in every $1 million invoiced. This compares to $77,750 in $1million for freelancers working on their own (500 times higher!)