I belong to a great mailing list by author and studio owner Jeffrey P. Fisher. You've probably seen some of his books like Cash Tracks or Ruthless Self-Promotion in the Music Industry (these and several others are currently in my own studio library!). His list is a great one to join if you want some quick tips from an experienced guy!
I just shot him off an email about something I read in his newsletter this morning. I've pasted it below, too, and hope it stands as an example of how to turn a negative business situation into a positive.
>>* There were quite a few responses to the last few tips. My words
seem to resonate with readers. Here's a particularly interesting
observation from Kent Mulkey: "In April, I did a favor for an
acquaintance and videotaped a BellyDance Recital and made DVDs of the
event. The carrot was a certain amount of money after the DVD orders
were collected. The bad part is that they didn't like the DVD after I
delivered 30 copies. They had given me a check after delivery of the
30, and I deposited it. Now, they want all the money back and will
not return the DVDs. The supplies for this were above one hundred
dollars and the time spent was way too much. I am disappointed they
didn't like my work but I thought it was okay especially taking into
account the lighting conditions and some other uncontrollable
handicaps. Not to mention that it was a favor because they couldn't
find a real video jock to film the show. I didn't pursue them at all.
Now I have to decide if I will return all the money or minus
expenses. They will not ever be a client. The good thing is that I
learned how important a contract is, even for a favor. Any time money
is involved or even not a contract can save much anxiety about what
the right thing to do is. All customers should pay for a job done in
I definitely think we SHOULD be paid, but, as in any business, we have to prepare a plan for those times when we get the less-than-desirable clients.
I sometimes acquire clients through third-party job sites, that handle both the leads and proposals, as well as payment. One thing you have to keep in mind with these places (which I learned the hard way) is that, though they themselves are reputable, finding a client via them doesn't mean the client is reputable.
I was hired for a :60 radio jingle, and did a great job for a great price. We handled all script writing and voice auditioning in-house, had great communication with the client, and received 50% of our total fee upfront. It was a fun job, and everything was going great!
Then, contact became sporadic. I wasn't getting the feedback I needed to get the job wrapped up to meet their broadcast schedule. Finally, I heard back and all seemed to be going great again. They wanted to deliver final payment, even before we were done, since it was a lag on their end.
I invoiced, and that was the last I'd heard until I got notice from the job site that they'd been paying all of us (they'd hired several other professionals for other jobs at the same time) with a fraudulent credit card. This resulted in a chargeback to me for what I'd already been paid, plus a lot of time and work down the drain for myself and the voice artist I'd ultimately hired and paid.
I did a little research, and it turns out the client (who had several different names he was working under) wasn't even really working for who he'd said, so I had no legal course of action with them. The 'client' himself was overseas and, after I'd done some research, wanted on several warrants for more of the same (though with much bigger monies involved than little ol' me!).
I knew I would be taking a loss on this situation, if I chose to. But I wanted to take my lemon and make a lemon martini!
Since I never relinquished ownership of anything, I have a great piece of work which is now not only a great spec piece I can show other clients, but one that is ready to license to the next company who needs a slick :60 ad with quick turnaround (with the quick addition of a new voice over). I also built some great relationships with overseas voice talent that I know will be revisited with future projects. And the job service chargeback isn't something that's a ton of stress, since I was more than cooperative with sharing the information I had on the fraud, in order to keep him off of the site in the future.
My advice to share? If you work with a third party job site that handles any part of the payment process for you, utilize their "Escrow" service, instead of "Invoicing" or using an outside payment method! If I had insisted on "Escrow", I would have been more protected under their ToS, and could have even used their legal service to fight for me at no extra charge. They're in the same boat as we are when things like this happen, and have just as much to gain by going after these frauds. Don't be afraid to lose a few clients who are turned off by the "Escrow" requirement in order to protect yourself in the long run!
And of course, never see a job as a complete loss. With the prior posted DVD problem, use it as a sample, if you're still proud of it, or find a way to maybe re-edit it to satisfy the client (then maybe place it online for downloading/burning to DVD at their convenience).