Still waiting for payment from that job you did three months ago? Try these ideas to make life easy for the production manager and accountant – and a little harder for the slow-paying producer.
The Practical Issues
1. A full A4-sized page invoice, typed neatly and professionally, is preferable to a hand-written small page torn out of an invoice book.
2. Whenever overtime, turnaround or other penalty occurs use a timesheet. A timesheet provides adequate space to clearly set out the time that you have worked and leaves adequate space on the invoice to clearly state the total number of days, penalty payments, etc. A timesheet is not a substitute for an invoice. It is an additional page of information.
3. Withholding Tax is not deducted from rental, expenses and consumables that you charge the production company. Put these items on a separate invoice and the production accountant will be able to process your payment more efficiently.
The Legal Issues
4. Terms of business for a contractor should be that payment is due in 7 days of their receipt of your invoice. Once you have performed your services satisfactorily, then the production company is your debtor. If you don't write your terms of business on the invoice, don't expect to be paid promptly.
5. The producer offers an early payment discount. It is not reasonable for the contractor to be offered an early payment discount. You should offer the producer late payment interest.
6. The producer doesn’t pay. Many production companies are passing their cash-flow problems onto the crew. They have not arranged adequate business working capital and so they pay crew after their client has paid them. However, many have the money to pay you and are either financially not viable or are collecting interest on the funds. NZonAir and NZ Film Commission funded projects have regular payment draw-downs to the production bank account and the producer should have the funds to pay you within seven days. The common practice in the TVC market is for the agency to pay the producer one-third of the funds on signing of the contract, one-third on the first day of production and the last third on delivery of the master, although this is often paid on the 20th of the month following. TVC producers have the money. Australian TVC agencies usually pay producers 50% in advance of production and 50% several months after production. This does not excuse them from not having adequate working capital.
7. Penalty interest. The principle of a late payment penalty interest is that it must be part of the contract. As most of the advertising, corporate and broadcast market does not use written contracts, you must advise your clients that you will charge interest on your rate card and on your invoice. The reason for charging interest is to encourage your clients to pay you as quickly as possible. However, legally you can’t set the rate so high that the courts see it as a penalty to deter your clients from paying. What you are trying to do is recover actual loss. The loss is effectively your overdraft rate plus a small additional margin for administrative costs and hassle. As your overdraft rate is rarely fixed it’s more effective to make a reasonable estimate of 1% to 2% per month. Note the day that you mail, fax or hand over the invoice, add one day for postage, one calendar month and then send a statement with the added interest. The Guild recommends that all screen production personnel advise production companies of penalty interest and charge it.
8. The producer doesn’t pay the full amount. The law is clear that an undisputed debt cannot be satisfied (or cleared) by a debtor sending a cheque for a smaller amount, unless the creditor agrees in writing that the lesser payment is accepted in full satisfaction of the debt. If the debt is disputed you are still entitled to bank the cheque. However, you must tell the producer that you still dispute the amount paid and will bank the cheque to offset part of the claim. Where the creditor tells the debtor that the terms of a settlement offer have been rejected, with or without the banking of the proffered cheque, then agreement between the parties has not been achieved.
9. Alteration of invoices. It is not legal for a production company to alter your invoice without your agreement. This often occurs with a dispute over overtime or penalty hours or rate. Some producers and production managers alter invoices and pay the amount they believe they owe you. The producer or production manager must inform you of their position, and you can then come to an agreement or dispute the amount. The Disputes Tribunal is the simplest legal authority to deal with these issues.
10. They owe you money and they say you owe them money! If a production company owes you money and have made a claim against you (eg. an insurance excess payment they claim you are responsible for), they cannot legally deduct that amount from the amount they owe you without your agreement. The production company generally also has no right to not pay you until you pay them. This is particularly relevant for insurance claims made against the technician which may be disputed in court. Should a producer make a deduction from your invoice you can take them to the Disputes Tribunal (and most likely win).