Author: Chris Wheal

Creative selling (2)

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What motivates your client?

In order to sell you have to think the way your client is thinking. When customers buy a product or a service they are buying what the product or service will do for them - not what it is.

When you buy a car you could well be buying a status symbol, or you might be buying the freedom to go wherever you like without the limitations of public transport. You are not buying a metal box on wheels. When you buy shampoo you are not buying a container full of oily liquid. You are buying beauty, cleanliness and admiration.

Advertising is based on the theory that people buy what things do for them - not what they are. What the product is is a feature. What the product does is a benefit.

Why do you buy?

Think about what you buy, why you buy that product at all and why you buy that particular brand. You then need to apply the same rules to selling your services, skills and products.

The main difference is that the motive of the buyer is usually less obviously emotional. The benefits you need to get across to your customer are usually related to the success of your customer’s business.

The customer is asking the question: "What’s in it for me?". To answer this question we have to tell the customer not what we will do but how what we will do helps meet their needs.

And a customer’s needs may be very different. An acting role may require a Deep South drawling accent but that may not be the key motivator of the director. If the director has just had a nightmare dealing with an actor who turned up late or who could only work mornings because he was drunk after lunch, then a prime motivator might be an actor who turns up on time and will work all day. Dick van Dyke didn’t get to play Bert the chimney sweep in Mary Poppins because of his perfect London accent.

Getting a job just because of punctuality may sound daft but you’d be amazed how many freelances are regularly late and miss deadlines, in all walks of life. Helping your client get over their deadline problem is a benefit. For that benefit they will be happy to pay.

Know your customers

To work out what benefits they would appreciate, you need to build a picture of the buyer and the business. Take every opportunity of learning as much as you can. Ask your agent about them, ask other freelances. Google them and read about them in the trade press or on industry websites and blogs.

Keep your eyes open when you visit. Talk to employees if you meet them. Get to know the buyer as a person and, if she or he is already a customer, study the buying record. Why did they buy when they did and why did they not buy everything you offered them?

The object is to decide whether your potential client is most concerned with quality, price, service or ease of operation. You will then know how to target your sales pitch.

 

Creative Selling (1)

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Why we must learn to sell

Selling – it’s almost a dirty word to us creative types. We tend to be artistic, have flair, create masterpieces. Our work should sell and our talents should be recognised just because. We’re good. We know we’re good. The world just needs to see that.

Unfortunately the world sometimes needs its eyes prised open. It needs to be sold the idea of just how great we are. The trouble is, we’re not very good at selling. It’s embarrassing. It’s uncomfortable. Selling is something that people who didn’t have our talent were forced to do.

Many of us use agents or intermediaries to sell for us. But even then, we all need to improve our selling skills. An agent can only get you so far – an audition, a screen test, an interview. Once there, we need to sell ourselves.

Why do people buy?

One of the key errors we freelances make is misunderstanding how to sell. To get it right we need to understand how people buy, and, in particular, how different people buy for different reasons. There is no one way to sell your skills – you need to tailor your approach to the buying motives of each potential customer.

Think why someone buys a particular make and model of car. The same car will be bought by one person for comfort and reliability, by a second for appearance and performance and by a third because the boot space is big enough for their golf clubs or their child’s buggy.

The salesman sells the same car in three different ways, pushing its different strengths to match the buying motivation of the customer. He sells the fully adjustable seats, the air conditioning and the arm rests to the first customer. He sells the engine size, acceleration and the alloy wheels to the second customer. And he sells the fold-away rear seats, boot width and luggage rack accessories to the third.

Customers have different reasons for buying

If you can work out which buying motives are influencing your potential customers you will know how best to present the benefits of your product or service to each customer.

 

Getting paid (5)

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Using the law

In theory, the law is on your side. In reality, the law sees you and the giant corporation you are freelancing for as two equal bodies. It does not recognise that the bigger organisation has more power and influence, can hire expensive lawyers and can bully you just with the threat of making sure you never work again.

Having said that, there are times when using the late payment laws can be very helpful.

Proper name

The full name for the late payment legislation, which you should make clear on the invoices you will use, is: the Late Payment of Commercial Debts (Interest) Act 1998 as amended and supplemented by the Late Payment of Commercial Debts Regulations 2002.

This means you can charge a fee for any invoice not paid on time, plus interest at eight percentage points above the Bank of England’s base rate. Interest rates are currently very low so the interest does not add up to much but the penalty charges are worth it.

For bills of less than £1000 you can charge £40. Between £1,000 and £9,999.99, you can charge £70 and for invoices of £10,000 or more you can charge £100. So even if you only invoice for £10, if it is paid late you entitled by law to a £40 compensation fee.

Do the Maths

Calculating the interest on top of the fee gets more complicated. First you need to know the current interest rate. This has been simplified and for the purposes of this legislation, only changes twice a year. The Bank of England rate on 31 December is used for the first six months of the year and the rate on 30 June is used for the next six months. The BofE rate has been 0.5% since 2009, making the amount you can charge 8.5%.

You take the amount of the debt (including VAT if you charge that) and multiply it by the interest rate (8.5% is 0.085) This gives you the amount in interest for a whole year. You divide that by 365, which gives you the daily rate. And then you multiply that by the number of days the invoice was paid late.

So, a £100 invoice paid ten days late is £100 X 0.085 = £8.50 ÷ 365 = 2.3p per day X 10 days = 23p. But add that to the £40 fee and the total you can claim is £40.23. There are many interest calculators online that you can use (see links below).

 Template letter

All you need to do to claim is write or email setting out that you wish to claim, giving the invoice and payment details.

Here’s a draft you can copy and adapt:

I am claiming late payment fees and interest on the invoice detailed below under the Late Payment of Commercial Debts (Interest) Act 1998 as amended and supplemented by the Late Payment of Commercial Debts Regulations 2002.

  • Invoice number: XXX
  • Dated: XX/XX/XX
  • Amount: £XX
  • Invoice due date: XXX
  • Invoice paid date: XXX
  • Days late: XX
  • Interest rate: XX
  • Interest charged: XX
  • Fee: XX
  • Total amount due: £XX.

Please make payment immediately.

If you have several invoices you might be best to produce a table of them – but you can include as many as you like in a single demand.

The key here is that you can use this as a lever to get customers to pay on time. The law allows you to wait six years before claiming your late payment charges and interest but if you keep pointing out that paying you late is incurring these charges, it can put pressure on firms to speed up payment. And you can, at the end of six years, claims for the whole lot in one go.

This might be particularly relevant if you work for one organisation for several years that paid a few invoices late. Once you have ceased working for them, demand your late payment entitlement.

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Getting paid (4)

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What to do when you don’t get paid on time

It happens to all of us. In fact, I bet we’ve all forgotten to pay someone for something, sometime, and needed a reminder. So always start out on the basis that it is an oversight – a mistake.

Be firm but be polite and cheerful. Ask if there was anything wrong with the invoice, or with the way it was sent. Ask if there is anything you can do to help invoices get paid faster next time.

But don’t be fobbed off, either with excuses or brazen refusals to pay on time. Make clear the payment time (credit period) is part of the contract. You have carried out your part of the contract and their part of that same contract is to pay on time.

The law

Explain that this is a legal requirement and not an optional extra. Remind them of the late payment legislation and that you are entitled to claim for bills paid late. Explain that late payment charges will end up costing them more and you want to help them avoid those extra charges. You want to work together.

In recent years I have had a rule of thumb to work with a client in this way for three payments. If the first is late we have a discussion about it, with me making any changes necessary to help speed up the process (billing at a certain time to coincide with payment runs or copying the invoice direct to an extra person to speed approvals). I expect them to make changes in return.

They may not get it right still the second time, but I do expect to see an improvement. I will have been in regular contact to check the progress of the payment. These regular calls and emails also give you an idea about whether the company is taking the matter seriously or not.

Usually they get it right by the third time round. If not, you need to make a decision about what you do next.

New or old customers

Most payment problems arise with new customers and then settle down. Every now and then a regular prompt payer will miss a payment through a lost invoice or other error (which would have been spotted had you chased up the invoice after you sent it). Most of the time these are nothing to worry about and can be resolved with a friendly chat.

But late payment can be a warning sign of longer-term and more serious problems. Check the status of each customer before supplying further material. Are they in trouble? Have they their own cashflow problems? Are they solvent?

Strict credit advice would be not to continue to supply if the account is overdue. In reality most of us will supply while a problem is sorted out. But don’t let the amount owed to you build up.

Special terms

You can set special terms (7 or 14 days) if the customer has paid late before. And if the customer fails to meet the special terms, revert to pro-forma invoicing (invoicing and getting paid in advance) or demanding cash on delivery.

Ultimately you may have to cease supplying altogether. That’s a painful decision to make for any freelance, but less painful than working your guts out only for the company to go bust without paying you.

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Getting paid (3)

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Fitting in with other people's system

Company payment systems are a minefield. Each will have its own foibles and you need to get your head round each and every one of them to get paid promptly.

People can be important. Within each organisation there is someone with the power to make things work efficiently – you need to identify that person and work with them to ensure you get paid on time. There is sometimes so substitute for charm and good manners in the battle to get paid. There may be times when you will need to be firm with them if there have been problems – having been charming and polite before then will emphasise your seriousness.

For some firms you will first need to become an approved supplier and have filled in forms and provided your bank details for scrutiny. Don’t fear this. It may indicate a high level of efficiency and identify a person you can speak to in order to check their invoicing and payment system (but not necessarily).

You need to find out:

  • Where to invoice
  • Who to invoice
  • Details to include: a description or date of work done, a purchase order number, a reference)
  • In what format they accept invoices (by post, email, as a PDF or Word document)
  • By when they need invoices to be included in the next, or relevant, payment run (some companies only make payments on fixed dates each month)
  • Who they need to approve or sign-off your invoices (you may need to chase them too or get them an invoice before they leave for their holiday)
  • How payment will be made (cheque, cash, bank transfer)

Always invoice on time, accurately and to the correct person(s) responsible in the format they require, using purchase order numbers or any other references necessary.

Chase up within a few days to ensure the invoice has been received, is in the correct format and is being processed. If you know it needs to be approved by a named individual chase them politely too.

Chase up the invoice a few days ahead of the due date or a few days ahead of the company’s payment run to make sure your payment is being included. Be firm but polite in your insistence that you be paid on time.

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Getting paid (2)

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Clarity is key

The scramble to snatch up scraps of work can sometimes cloud the details of exactly how much a job is worth and when we are going to get paid. This is almost always a mistake.

Negotiate and agree payment terms at the point of sale, not afterwards. Afterwards is too late. Either a genuine misunderstanding can come to light or someone might try to rip you off by offering less than initially agreed. If you have already done the work, it may be too late.

You don’t want to be in a situation where your client is saying: “I thought that was included in the price,” when you thought it would be for an extra fee.

Whatever deal you agree, make sure you put it in writing – an email – and that you keep a copy. Whatever your terms – and they may vary from job to job or from one client to another - make your terms of trade clear and unambiguous. Set out:

  • The details of the job, including any dates, quantities or other conditions you have accepted and what is excluded
  • Payment amount (s)
  • Limitations – any restrictions you have put on them using your work, such as copyright, ownership, repeat fees,
  • Date of expected invoicing
  • Credit terms (when you expect to get paid), including stating your intention to use the late payment legislation.

Once you have done the work or supplied the goods or service, get a confirmation that what you have supplied has been received and check that the customer is satisfied with the quality and number delivered. Errors or faults are often used as an excuse for delaying or reducing payment.

And get that invoice in sharpish.

Getting paid (1)

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Be careful about who you work for

Check out all new clients before you start working for them – avoid the pitfalls of working but not getting paid.

What could be better than getting a new client, you think. Maybe someone rang out of the blue, or emailed, or even called. They saw your name, liked a piece of work or yours, or you were recommended by a colleague – they can even tell you their colleague’s name and you are proud of the connection.

You’re chuffed, flattered, grateful. You could do with a bit more work right now, or you were wondering what you’d do when the current project comes to end. Here’s the answer and you haven’t even had to go looking for it.

But wait. It might be great news, but it might be more trouble than it’s worth. If this is a fly-by-night outfit on one on the verge of bankruptcy, you could be about to commit to working for free with no prospect of ever getting paid.

Credit checks?

Big corporates do credit checks and due diligence before accepting clients. For most of us freelance professionals buying credit reports and seeking references is not realistic. But we can - and should - check out customers before we sign up to work for them. If they don’t pay, or go bust on us, we will have lost out.

Google is your friend. A few minutes should find out a little about this potential new customer. What are people saying about them? Are there any complaints? Check forums, chat rooms, any websites criticising them for not paying their bills or trying to cut down agreed fees after accepting similar work?

Personal contacts are even better – do you know anyone who has worked for them? What were they like to work for, did they pay well and did they pay promptly? Are people still happy to work for them? One reason organisations are often looking for new talent is because they have alienated their old favourites who will not longer work for them – if not, warning bells should sound. Check with your union – have they had to help members squeeze money out of them?

Pay close attention to quickly growing companies or companies that have been, or are being, taken over.

Sooner, rather than later

Do all this before agreeing to work for them – afterwards will be too late. A sensible freelance will also monitor existing customers and review them twice a year. You need to spot if a client is getting into difficulties and adapt accordingly, perhaps billing smaller amounts more often so that, if they do stop paying, you’re left being owed less. Better still, cease working for them before they get into difficulties.

Grade your customers by risk levels and set credit limits and terms for each customer. You might normally expect to be paid 30-days after sending the bill but not every customer has to be treated the same. You might offer to bill monthly instead of weekly, for example, but only if you can be paid within a week. That might save both of you the hassle of dealing with lots of invoices.

There may also be times when you have to ask for payment up front – before you start. This might be part payment in advance and the rest when you finish the job, or, if you are worried about the client, you might ask for full payment in advance. You might even ask clients to apply for credit terms – a child entertainer or magician, for example, might do many jobs based on payment with the booking but have a corporate client that provides regular work who pays on invoice after each performance.

It’s a case of horses for courses.