As a professional artist you may spend a good part of your time sending out invoices, chasing payments and generally worrying about your cashflow. This guide by Alison Branagan considers different payment options and offers practical advice on managing debtors.
As a professional artist you may spend a good part of your time sending out invoices, chasing payments and generally worrying about your cashflow.
This guide considers different payment options and offers practical advice on managing debtors.
For every sale there must be an agreed contract between you and your buyer or client.
Preferably this should be in writing but many agreements for the sale of artworks or artists' services are verbal promises given on trust. A verbal agreement is a contract if the buyer offers to buy your work or services for an agreed price. As soon as the conversation has taken place it's important to follow up with a letter or contract accepting their offer, with proposed payment and delivery arrangements included.
Best practice would involve the signing of a contract followed by an invoice for payment.
There are many ways of receiving payment for work made or done. Depending on your clients, the type of work you do, and where you sell your work, you might be paid via payroll as an employee (PAYE), or as a self-employed person against an invoice. You may need to handle cash, cheque and credit card payments, negotiate advances and credit terms.
When undertaking teaching or residency work for a large organisation such as an educational institution or local authority, you may find yourself being treated as an employee rather than as a self-employed person. You will then be paying tax and NI on a PAYE basis, ie tax and NI will be taken at source.
If you are registered as self-employed running your own business or working freelance for a variety of clients make sure that your contract recognises your self-employed status, allowing you to handle your own tax and NI payments. If you are registered as self-employed you will have been issued with a Schedule D or Unique Tax Code which you should incorporate into your invoice.
Getting paid in cash is common at craft or art fairs and open studio events especially when dealing in small amounts of money. You'll need a cash float but avoid carrying large amounts of cash bank your takings regularly. Make sure you issue customers with receipts and keep a record of sales.
Cheques & credit cards
Cheque details need careful scrutiny remember to verify:
- account number
- expiry date
- and write the card number on the back of the cheque
Don't accept cheques over the card limit. If you feel that you have to, ask the customer to write their address on the cheque and check this against additional identification such as a driving licence.
If you find that many buyers want to pay by credit card then it's worth researching this option. The credit card company will charge you commission as a percentage fee, so there is a cost involved ring round the banks to compare deals. Credit card slips are paid into the bank just like cash, and you'll receive a monthly statement from the credit company saying how much they have charged for the service.
When undertaking freelance work such as commissions, project management, residencies, lecturing or workshops you should issue an invoice for payment.
With commissions especially with unfamiliar organisations, or when selling to new overseas clients it's sensible to ask for a percentage of money up front to cover initial costs. This is known as a 'proforma' invoice. It is reasonable to ask for 20-40% of the price of the commission as an advance payment before proceeding.
With longer-term projects you should negotiate and formally agree a schedule of payments, perhaps at the start, middle and completion of the work. You can then issue your invoices against these agreed payment dates.
For buyers interested in buying or commissioning an artwork but unable to pay the full amount straightaway you could negotiate the payment over a few instalments. Your arts funding body may have an arts purchase plan to help you out with this.
If you're unsure about an individual or organisation in terms of credit worthiness, either ask for cash up front or on delivery, or up-front. Always set a bank reference when dealing with larger organisations.
In terms of giving credit a period of time in which to pay there is no reason to give more than 30 days. Credit terms should be clearly stated on your invoice.
It's important that invoices and order forms have the same professional design as your stationery and promotional material. A good-quality printed invoice with stated terms and conditions will be taken more seriously than a hand-written document.
Your invoice should:
- be clearly laid out with your name, business address, telephone, fax number and email
- have a number (eg 'Invoice no: 0001') to act as a sales reference
- give a description of the products or services sold, date of sale or completion and quantity of goods eg number of prints, or number of days worked
- include the name of your customer
- include your self-employed tax reference number if you're a sole trader or partnership
- include your company number and registered address if set up as a company
- include a subtotal for VAT if you are VAT registered
Terms & conditions
Payment terms are an important part of your invoice. It's usual to state that payment is due 30 days from date of invoice or delivery of goods. For dealings with individuals you could give just 10 days but it's advisable to allow one month for complex organisations such as universities, large companies or local councils.
You may also want to remind your client of other terms and conditions, such as your right to retain the copyright on your designs or artwork, charges for storage on late collection of large pieces or interest on overdue payments. Whatever you decide, your terms and conditions must be clearly stated on the invoice.
Make sure you keep hard copies of these documents with your other business records.
If payment is not received within your stated credit period you will have to take active steps to pursue the matter:
1. Phone your client to check whether payment is in the post or due in the next few days. If not, send a written reminder warning that you will charge interest and debt recovery costs if you are not paid promptly.
2. Businesses in England and Wales, including freelance artists, can now charge compensation for administration time £40 for up to £999, £70 for over £1000 plus 8% (above base rate) interest, on late payments from other businesses or organisations. Artists in Northern Ireland and Scotland should seek guidance from local enterprise agencies on this.
Once you've sent a demand for interest, administration costs and the original amount owed, phone your debtor again to see if you can come to some agreement about payment.
If the debtor still refuses to pay, inform them that you will take court action if the debt is not settled by a specific date.
Legal proceesings will incur costs. Having clear records of invoices, reminders, warnings, etc, could be key to winning your case. If you win, the debtor will have to cover your costs.
If you've presented all your documents professionally you shouldn't get to this stage.
Alison Branagan is an independent artists' professional trainer and advisor.
Download the Better Payment Practice Guide, advice on charging interest and administration fees for late payment.
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Department of Trade and Industry
T: +44 870 150 2500
ACAS Advisory, Conciliation and Arbitration Service
Public Enquiries T: +44 20 7396 5100
Alison Branagan is an author and business advisor, specialising in business start-up, self-promotion, and entrepreneurship. A & C Black have recently published her books 'The Essential Guide to Business for Artists and Designers' and 'A Pocket Business Guide for Artists and Designers'.
First published: a-n.co.uk April 2003
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