Originally published as Chapter 13, in the book titled The Real Business of Photography , Allworth Press, NY ISBN 158115-350-3
Bankruptcy
Businesses go bankrupt. When they do, the money they owe you and
whether and how much you get paid are subject to a complex body of law
and long action timelines. You are not going to be able to do anything
but wait for an outcome. Secured creditors get paid first, and that
usually eats up all the assets of the company. Photographers are
unsecured lenders. They wait. If unsecured lenders get anything, it is
usually pennies on the dollar. If the bankrupt company is reorganizing
you will get paid something, but again it is pennies on the dollar.
Once the bankruptcy is concluded the companys debt is discharged, and
you can do nothing to stop that. There is only one way to protect
yourself from being damaged by a companys bankruptcy. Dont deal with
financially shaky companies. There are ways to find out if companies
pay their bills. Well explore that, subsequently.
Every business has occasional cash-flow problems. The difficulty with cash-flow problems is that they are contagious. Someone doesnt pay your client who doesnt pay you because they needed that payment to do so. Then you might not have the money to pay someone else. Of course, adequate reserves or good credit will get you past your cash-flow problem, but your reserves wont help you get paid.
You cannot adopt your clients problems when it comes to its inability to pay. You have no obligation to be a financier. Your best course of action is to have a collection policy and system. Many photographers do not want to pressure their clients who are late in paying their bills for fear of losing their business. Good collections practices allow you to keep a friendly relationship until it becomes clear that the client is not such a good client to have. A sample of a policy and system will be presented later in this chapter.
Unsatisfactory Work
Unless you hear this claim shortly after you deliver the work it likely to be a bogus claim aimed at getting the price down after the work is done. If the client has used the work, it is satisfactory. If it has not, you have a problem that is deeper than collecting your money. You now face the probable loss of future business, and you will have to re-shoot or negotiate a settlement to keep the business. This is not a collection problem. It is customer-relation problem.
Lost Invoice
Have you ever lost an invoice or other important paper? Enough said. It happens. A good collection policy and program will catch and remedy this problem. Again, I refer to the sample system a bit further on.
Go to Part 3
(c) 2004 Richard Weisgrau [contact] [bio]
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