How to handle extended payment term requests from agency clients
How do you deal with clients who ask for different payment terms than the ones your agency offers? In this episode, Chip and Gini discuss the importance of setting clear expectations from the start and being proactive in following up on overdue invoices. They offer different approaches and creative strategies for handling payment terms with clients. Key takeaways Gini Dietrich: “You don’t go into a restaurant and order dinner, have dinner, and then a month later pay for it. That’s just not how it works.” Chip Griffin: “If you want to be paid on time, you need to invoice on time.” Gini Dietrich: “Set the expectation, be clear about it, communicate it. And treat it like a business relationship.” Chip Griffin: “Anytime you’re willing to walk away, you’re much more likely to get the client to bend and give you what you need.” Related Beware of dangerous agency RFP terms and conditions How to do client collections right and get paid faster Payment terms for agency subcontractors View Transcript The following is a computer-generated transcript. Please listen to the audio to confirm accuracy. Chip Griffin: Hello and welcome to another episode of the Agency Leadership Podcast. I’m Chip Griffin. Gini Dietrich: And I’m Gini Dietrich. Chip Griffin: And Gini, I think we need to talk about, you know, how long it takes you to pay me for my time on this podcast. Gini Dietrich: Okay, no problem. Chip Griffin: Right after this. So, yeah, I mean, I feel like I’m always sitting there going to the mailbox looking for my check and it just never shows up. Gini Dietrich: Well, first of all, the fact that you’re going to your mailbox to look for a check says something. Secondly, you’re not going to get a check. Chip Griffin: What? Gini Dietrich: Sorry. Chip Griffin: But I, I thought the deal was you were paying me to be part of the show. No, darn. All right. Gini Dietrich: Well, now that you know that bye bye Chip Griffin: and that concludes this episode. Signing off forever. No, but I do think it is, it is helpful for us to talk about payment terms, because this is something that comes up all the time. I’ve had a number of conversations just in the last few weeks about it. It’s a question that came up in the Spin Sucks community recently as well. But, you know, trying to figure out what payment terms to accept as an agency. I think we all have our defaults, and we should talk about that, because I think some people are way too lenient in their default payment terms. And I think people should be more aggressive with what they’re setting out on the table as the agency. You know, in lieu of whatever the, the client may want, but sometimes clients will ask for even more than the agencies are offering. And so how do we handle that? So how would you like to go about doing this? What are your standard payment terms? Gini Dietrich: Well, ours, ours are 30 days. and I don’t accept anything more than that because my feeling is number one, I have people to pay, including myself. Number two, we’re not the bank. And number three, you don’t go into a restaurant and order dinner, have dinner, and then a month later pay for it. Like, that’s just not how it works. So, I understand that, you know, in the business world, it’s a little bit different in your invoicing and, you know, doing that, so it takes some time. But, I won’t accept anything less, more than 30 days, because it’s, it’s just not acceptable for us to be able to run our business in, in that way. I just, from a cashflow perspective. And I, in the past, have made the mistake of just letting clients do what they want and, you know, getting 90, 120, 150 days behind and suddenly you’re diving into a line of credit or you’re getting a loan to, to pay your bills and you’re not getting paid and that’s just not acceptable or not the bank. So I no longer accept anything longer than 30. Chip Griffin: So since. I know a lot of agency owners don’t have a background in finance or these kinds of things. Let’s tal