I took my wife away recently to a lovely hotel on the Med, not far from my City… It was very relaxing and during our stay I billed most things to our room. When we came to check out, I perused the bill, thanked them for their service and hospitality and went to leave the building. They asked me how was I going to pay, and I informed them that my usual terms were 90 days payment. They seemed surprised!
The Manager was called and I was invited into his office. I went on to explain that I ran a recording studio which is essentially the same as his hotel. Clients book my ‘hotel’ and often stay for long periods of time. We offer accommodation, catering, a client lounge stuffed with games and movies and a large recording space. Every day we clean the studio, we maintain our facility diligently, we change the sheets when required, and basically try and ensure that when the client walks through the front door, they have an enjoyable and productive stay.
I informed him that we generally had two types of client. Client A tended to be an unsigned artist or a band, who were investing their own hard earned cash to pursue their dream. They paid a deposit in advance and would normally settle the balance of their invoice (including any extras) either on departure or shortly afterwards. In all of my years, I have never had a problem with these type of clients. They are the foundation of my business. Prompt payment allows the wheels to turn smoothly, meaning I can pay my staff for the work completed, and the running costs can be covered out of an overdraft until payment is received.
Client B tends to be an artist signed to a record label. The price we charge is the same for either client. However, and here’s the rub…labels can take up to 90 days to pay me. If a band books for a month…I will issue the invoice at the end of the stay including all extras, which may include hiring of extra equipment, food and drinks. This means that I might be 4 months after I first incurred an expense before I get paid. This puts immense pressure on the studio bank account. Staff have to be paid as do the usual bills including insurance, taxes, utilities etc.
Given the credit crunch, and the changes that the industry has and is facing, isn’t it time that this practise ended? Perhaps the larger, wealthier organizations could pay as per the terms of the studio (in my case 14 days?) As far as I’m concerned, I know which client I prefer.
TTFN The Compressor
Epilogue….. Needless to say, the Manager didn’t care about my plight and I duly paid my bill!!
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