Many of you are married or in long-term relationships. Think about the last big fight you had with your spouse. We’d bet even money it was about either disciplining the kids, hassles over the in-laws or, most likely, money matters.
Just like in a marriage, financial tensions are among the most divisive relationship issues between advertising agencies and their clients. And just as in personal conflicts, the biggest problem is that the two parties communicate poorly about how they handle financial matters. This inevitably leads to unnecessary clashes over billing, rates, estimates and collection.
You can prevent, or at least substantially reduce, financial tensions by providing clients with an agency Billing Standards and Practices Guide.
This document reviews all of your standard financial practices—how you prepare and issue invoices, your rates, when additional fees may be incurred, your preferred payment terms, how you track and justify retainers, etc.
It’s not enough to just hand clients your guide and expect everything to run smoothly, however. You will actually need to sit with your clients (and ideally, their primary accounting person or CFO), and review the guide. This way, they can ask questions and you can provide the answers. Also, where your practices and theirs do not align, you can negotiate terms that work for both parties. Then you can customize the document and get their signatures of agreement. Both of you will have the guide on file for reference in case of future questions.
Having a Billing Standards and Practices Guide is a professional and common sense way to avert conflicts over money as you move forward. Make this document and the review meeting part of new client orientation. Also, try to meet with existing clients to review standards and practices. Tell them you are seeking to ensure your financial dealings are aligned with their practices.
Your Billing Standards and Practices document should include:
- Estimates, quotes and authorizations
- How you invoice
- Hourly and blended rates
- Retainers and fee adjustments
- Payment terms, phased payments and deposits
- Discounts for payment within terms
- Cancellation/kill fees
- Scope creep and changes
- Markups and margins
- Working with vendors
- Intellectual property and copyright negotiation
- Media purchases
- Client personnel authorized to approve invoices
- Agency accounting contact people
This can be part of a larger “How to Work with Our Agency” guidebook, including everything from your service team to your processes; or you may present your financial practices separately. However you offer it, get it done. Your financial life will have fewer hiccups and far fewer storms, and your client relationships will be more relaxed and collaborative… just as a good marriage should be.