Question
Hi,
1.We took on the creative video project because it was creatively stimulating, and our team agreed that it would boost our portfolio.
2. We signed no contract (big mistake, we realize now).
3. The estimates were approved on a per minute basis as creative video projects usually work.
4. Our co-founder who acts as the account manager is in contact with just one person in the client organization.
Problems:
1. Timeline issues -
We were at fault with regard to the timeline. Multiple delays from our end for a variety of reasons.
But the client never fully canceled the job on account of these delays. They threatened but never shut down the work completely.
2. Delivery -
Work was completed in January. The first draft was delivered to our clients.
But there was a problem with the length and the payment.
3.Payment or rather no payment - Till this point, we had not taken a single dollar as payment (in January). Number one reason was because we were just setting up shop and did not have all the paperwork approved.
We sent out 50% of the invoice after the delivery of the first draft in January (and not for the full amount because we believed we may have to work on some review changes).
4. Estimate problem/change after delivery -
Then there came the issue of the interpretation of the approval estimate.
For video production based on the complexity of each project, we charge by the minute. A specific dollar per minute value was approved.
We had taken approval for a maximum video length of 2 minutes 20 seconds(in an email). But the final draft was longer.
However, the client refused to pay for even the length that was approved.
Because we had invested so much, we agreed a massive deduction of the video length (and so the budget too) to below 1 minutes 30 seconds.
5. Recalculated Invoice - Invoice was recalculated. 50% of the newly agreed length sent out. With the agreement (via email) that the final payment would be made in April'16, once we get the information from our clients on how to get the length down to the new mutually agreed length.
Even though ur work is animation. And in animation, every second counts.
6. Feedback -
There was no feedback from their end, despite numerous reminders from our end. Our single point of contact, their creative manager, would reply that he will work on it/sent it by so and so date, but till date we have received no information.
With their feedback pending, we cannot edit the video or complete the project.
And as we do not think it is ethical to raise the final 50% of the invoice, the final work has been completed, we have not sent the invoice for the full payment.
7. However, the payment for the first invoice was made in the beginning of April'16.
8. But since then, despite multiple assurances our client has not given us the feedback that will allow us to:
A) recover some of the financial investment made during production
B) allow us to the work in our portfolio (this was a big motivator for us to take up this project at a price point which wad much lower than the market rate).
9.We are very unhappy with these developments, and we also understand that we were naive on multiple fronts.
But now we would seek advice on what might be the best course of action to seek closure -
a) get the full payment ( preferably of the originally approved length)
b) ensure that our work will see the light of the day.
We had explicitly reiterated that we should be able to showcase the video as part of our portfolio.
Please suggest the options that we, as a small budding bootstrap and creative startup, can explore.
Thank you for going through our question.
Answer
I own a software development company based in Dallas, Texas and over the years have experienced several of the issues mentioned in your post.
Never start work with a client before having a signed contract in hand. The contract is the first step to making sure that both parties understand the expectations of the project such as payment expectations, the deliverable, the project schedule.
I find it helpful to get a down payment from a client to be sure that they are "invested" in the project. If a client is unwilling to issue a payment at contract signing, then you should have more payment milestones at major points in the project such as; design review, first 10 seconds of animation etc. Frequent payment milestones will help your cash flow and will focus the project on meeting the expectations of the client where possible.
Communication throughout the project is key. When a client goes silent that is always cause for alarm. Weekly updates using online services such as Skype or Join.me are essential when working with a client that are worlds apart.
There should be few surprises regarding schedule. As the project is progresses, amended schedules should be prepared and forward to the client for discussion during your project meeting.
It may be a good idea to engage someone located near your client to attempt to contact them to discuss a settlement. Some may suggest getting a lawyer or a collection agency involved, however there most likely is some way to solve this directly to receive (perhaps partial) payment from the client.
I am available for a followup call should you have any additional questions.
Regards,
Eric Silverthorn
