From the course: Contracting for Creatives
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Payment terms and Invoicing terms
From the course: Contracting for Creatives
Payment terms and Invoicing terms
- Payment and invoicing terms. I'm going to get a little financial here, so please bear with me. Every company has a cost of money and a value of money. Cost of money is what it would cost the company to borrow money. The value of money is the return you could make if you invested it. Money also has a time value that is usually expressed as either net present value or discounted cash flow. The time value of money takes into account the fact that whoever in the relationship holds the money gets the compounding benefit of that money, just like you would get a compounding benefit in a savings account. Simply put, payment terms are all about the time value of money. The longer you hold it, the more benefit you get. The sooner you have to pay it, or the longer you have to wait for a supplier to pay you, the less benefit to you. So what does this mean for you? As a creative, you're often at the mercy of larger companies or organizations. Unless your payment terms clause has some teeth…
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