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Engagement Fee Policies

Just wanted to do a little informal survey regarding the number of C&P users that use an Engagement Fee. What I mean by that is, do you have an established policy that requires a percentage of the estimated job to be paid in advance before starting work? And to carry it one step further, before the "Final" is delivered to the client, is the balance collected or is a small percentage retainage left to be paid after delivery?

Greg Weir VP Project Management Bravo Zulu Interactive

It varies. On broadcast jobs, we traditionally bill in thirds: 1/3 when the estimate is approved and the job is awarded to the production company, 1/3 on completion of dallies, and 1/3 when the dubs go to the stations. On print jobs, we usually progress bill as the invoices from vendors come in. Some exceptions: we bill up front for large research jobs (usually in halves), large photography expenses, and some printing. We reconcile when all vendor invoices have been received. Depending on what we've prebilled, sometimes it's a credit and sometimes a debit. Beware though - prebills cause problems within C&P in the areas of the WIP and the vendor invoice aging.

Mary McMurtrey

50% advance payment, progress billing if job costs exceed 50% prior to completion, and then final billing. It is written in our Terms & Conditions boiler plate verbiage on back of proposals. Then stick to it! I have never had to write-off bad debt costs using this method.

We also may choose to enter in a retainer relationship with larger clients, then we ask them to sign an Agreement Letter.

Roxanne M. Cowan Director of Finance Rutherford Bolen Group

In the past we have requested a 50% "progress payment" in order to begin work, with the balance (and any applicable sales tax) billed after completion of the project. (The footnotes on our estimates include the wording "50% deposit required".)

We found that this complicated our billing quite a bit, so we've modified our procedure to only request the 50% deposit for large projects or those that are expected to take quite a long time to complete.

Dorinda Sample Operations Managers Janzen IdeaCorp

We charge 1/3 down after the client sign off on the Estimate. Work does not begin until the Estimate is signed.

Jonathan Gundlach

Our policy is as follows: # New start up companies, 100% upon initiation of job # New clients, but yet established companies, I have their comptroller complete my credit application and upon a good, satisfactory credit reference, I extend Net 30. # On the bigger, over 30 day jobs, we step it out, 1/3 upon initiation, 1/3 upon prepress or 1st mock up and final 1/3 upon delivery of product. If you have any further questions, do not hesitate to e-mail me. Have a great day!!!

Felica Sparks Office Manager Benton Newton & Partners Advertising

We don't have a policy like that. We get signed estimates from all new clients. (The only clients we don't get signed estimates from are those we have worked with for years and know will pay.) We bill projects on a monthly basis. We would not hold back delivery until a final invoice is paid; the client will just receive his/her last bill with the next monthly invoice run. We also don't use retainers of any kind.

User

What problems does C&P have handling prebills? We are fairly new to C&P but are likely to do some prebilling, so any heads-up on problems we're likely to run into would be helpful. Thanks.

Chris Kirk

We do work in progress billings. 1/3 upon initiation of the job, 1/3 upon comp presentation and 1/3 upon final delivery. We do 1/2 and 1/2 if the schedule is less than a month. Using the term "work in progress" helps emphasis that the invoice is not just a deposit, but is actually for work being done. In C&P I have WIP tasks set up to help facilitate the billing.

Shannon Ellis Business Manager Tackett Barbaria Design

I have never experienced any problems. Maybe do not forget to pay your vendors, if applicable. Good luck!!

Felica Sparks Office Manager Benton Newton & Partners Advertising

I think that the problem exists with the WIP report in that it assigns costs by date - not by bill. We do not currently use the WIP report, so I'm not as familiar with it as others in this group.

Mary McMurtrey