Accounting Tips From Michelle Brown. Shoot, Invoice, Get Paid!
By: Michelle Brown AKA @MoshBrown on Twitter
As a filmmaker, cinematographer, or editor, there are three important steps you should know about billing. Step one: book a gig. Step two: track your time and expenses. Step three: invoice correctly. If you follow these simple steps, there might even be a fourth one: profit!
I am an accountant who works with a large number of contractors and consultants. I’ve seen everything, and I know what works and what doesn’t. You want to spend your time working and furthering your craft, not chasing down payments. Take a look at what goes into correct invoicing and you’ll be rolling in the green in no time.
A Little Background
There are a lot of ways to produce an invoice. Selecting the one that works best for you will ensure you are paid timely and are hired again. There are a lot of templates out there if you want to track things yourself. I have suggested a handful of Office templates straight from Microsoft. These will open with MS Office as well as with Libre or Open Office. You will still need to keep track of who and what you’re billing, so here’s where the next step comes in. If you’d like a program to do the work for you, Freshbooks is amazing. I have quoted a few folks right now I’m paying from these invoices, and they offer online payment as well! If you really want to dig in and be in charge of your finances, Quickbooks is the leader for small and growing businesses. Check out their online version for free. Quickbooks has online, Windows, and Mac versions, although their Mac version struggles. For those who are starting out, the online version will do what you need until you need to turn over your books to an accountant at the end of the year.
Before you get to that invoice, you need to look at your contract. Each job you get should begin with a contract of some kind. Verbal is friendly, but if money is changing hands you want to protect yourself. Make sure you read the language and understand it as much as you can. Pay attention to the payment terms. Standard terms for most companies are Net 30, which means the invoice is due 30 days after the date posted on the bill. At my company, contractors and consultants are paid Net 15, but all of our other vendors are paid Net 60 or more. Make sure you know how long you’ll be waiting to get paid, so you know when to check in. The next important item is a W9 form. Even if you are incorporated, no one will pay you without it. This form should be filled out to reflect your name, business name if you operate under one, and the federal tax ID number that you pay taxes with. Higher-level accounting systems won’t even let you enter a bill without this number, so it’s very important. The #1 delay I have with paying people is their failure to submit a W9 with their invoice.
Tracking Your Time
Each gig might be different. Depending on the contract you’re under, you may be billing hourly, daily, or for a project. No matter which way you go, it’s a good idea to track your time. This also includes your expenses. Track mileage, gas, food, and supplies as you go, and you’ll always know what each shoot is costing you. If your contract doesn’t allow you to bill for these expenses, at least you know what you’re in for the next time you take a job two hours away in the middle of a heat wave.
Track your hours worked each day, and if possible note what was done. If you spent three hours shooting, followed by an hour of data management, note it! The more you know about your own time the better, because if someone comes asking for details later you won’t want to scramble to make it up. Don’t worry about getting down to the minute; try to shoot for each quarter of an hour. The time you take scribbling down some notes could save your behind when a department trying to save money suddenly wants to know what REALLY took you two days to shoot.
Now for that all-important invoice. Make sure you have a bill to and a pay to address. The bill to should be the address of the folks you’re working for. Try to enter their business name and full address, and don’t be afraid to ask. Some companies won’t accept an invoice that isn’t correctly filled out, and a revision will cause another payment delay. Sending invoices via email is faster for everyone, so try to get an email of the accounting group if you can. The pay to should be your address where you would like to receive payment. If you’re able to receive payments via PayPal, ACH, or wire, include that information too. If you use a business name on your invoices but you file your taxes personally, make sure you have “Pay to the order of xxxxx” clearly noted. It would be a bummer to receive a check issued to “My Awesome Company” when you can’t cash it.
If you’re sending the invoice to someone other than who hired you, reference their name somewhere on the invoice. The less time the accountant has to chase down approval, the faster you’ll be paid. Always use an invoice number. You can decide what kind of numbering convention to use, but this is more important than it seems. If you need to inquire about payment, it’s better to ask for the invoice number rather than try to explain what invoice it is. I used to work for a magazine, and every creative invoice we received noted the issue it was to be included in. Editorial staff will often do this when they pass the invoice on, but if you know and you’ve already noted it, you’re a step ahead.
When you enter the charges on the invoice, all you really need is time worked times agreed to rate. If you’ve worked multiple days, it’s wise to spread this out for each day. If you did track your time and want to include it, this is the best place. Itemize your charges if they include additional expenses. Billable time is different from billable expenses. Some clients will want you to include copies of your receipts, if you’ve expensed certain items. This depends on each deal, and will most likely be spelled out in the contract. Always include total number of hours worked and total due at the bottom of your invoice. It sounds like a pain, but the easier you make entering the invoice, the more likely you’ll be paid faster. If your invoice looks like an eight year old can understand it, it’s ready to be sent.
Collecting the Dough
In a perfect world, you’ll send off your invoice with a W9, it’ll be entered, and a check will arrive in your mailbox. When that doesn’t happen, don’t panic. Remember what the terms of your agreement were, and even then give some headway. When you feel it’s been a bit too long, reach out to the accounting department first. 90% of the time, the hold up is there. Maybe there was a delay in processing, or maybe they had to chase down an approval. Sometimes it’s just a matter of timing. An invoice might come in between pay periods, which will cause a delay. At my company, I only have two pay periods a month. If someone misses one of those, it’s very difficult for me to issue a one-off payment. If you don’t have any contact in the accounting office, go ahead and reach out to whoever hired you. But do it nicely. You want to keep a good relationship with that contact, and they probably don’t want to be tied up with accounting issues either. Sometimes all you need to do is ask for a contact in accounting, to find out when you can expect payment.
If you’ve waited, and waited, and no payment has come, you still have options. When your invoice is about a month late (remember the terms!), reach out to accounting requesting payment. If a month later you’re still waiting, send another email that is more strongly worded. If at 90 days past the original terms you have no payment and no promise of when it will come, you can send a final demand letter. In this letter you can give a deadline of when you expect to receive payment, and the steps you intend to take if you do not. For many, this is small claims court. Small claims is a valid place to edge out issues, but it takes a lot of time. Sometimes if a final demand letter won’t budge a company to pay up, nothing will. At that point you need to make the decision about which is more important: collecting a debt or moving on to other work. Black lists exist for a reason, and unfortunately this is one of them.
If you take my advice above, I don’t think you’ll have to write many final demand letters in your day. Payments take time, even if they’re small, but if you do your homework you’ll come out on top. Keep in mind that large companies sometimes take a very long time to pay, so just do your own due diligence, keep in touch, and make sure they haven’t forgotten about you. If you appear professional from the beginning, you’ll be contacted again in the future.
Accounting doesn’t have to be the big scary burden people think it is. It also doesn’t need to be a box of receipts you don’t look at until January. Spend the time during the year to keep everything organized and you’ll win in the end. As your business grows and you find yourself making more money, the most important thing to go is find a reputable accountant. Creative types are brilliant, but finance isn’t always something that comes easy. An accounting professional who knows the rules is your ace in the hand. They can answer questions, offer advice, and ultimately help grow your business. New year, new you, new skills to help you keep shooting!
About the author.
Michelle Brown is a Bay Area native who always felt life was more interesting with a musical score. Working as an Accountant in San Francisco, she is learning and loving the DSLR world. Michelle enjoys shooting, editing, and finding the perfect song to make a night with friends seem like a theatrical masterpiece. Follow her journey @moshbrown