Custom Printing: Payment Terms or “Paying the Piper”

As with anything else, sooner or later you have to pay the bill for the commercial printing services you have purchased. Since printing involves both services and materials, there are certain established rules for payment as well as preferences among certain vendors. In your own print buying work, what is reasonable?

An Example

As a custom printing broker, I regularly negotiate payment terms for my clients with the printers I frequent. Most payment agreements are similar, but some are very different.

Net-30 is a common example—payment within 30 days. Some printers offer a discount for payment before the 30-day limit. (This would be for a credit account rather than a cash account, which is why payment can occur after the completed job has been shipped rather than before it leaves the printer’s plant.)

And here are a few other examples of negotiation terms (these terms, in contrast to those above, would be for non-credit accounts, which is why payment must be completed before the printer ships the job):

1. 25 percent, 25 percent, 25 percent, and the final 25 percent after viewing samples but prior to shipping
2. 1/3, 1/3, and a final 1/3 payment at specific points in the manufacturing process, prior to shipping
3. 50 percent before the printer starts the job and the final 50 percent before the printer ships the job

Establishing Credit

One of the services printers have offered my clients is the ability to pay up to a certain amount of time after delivery of the printed products (i.e., the printers I work with bill the clients directly). I will start with this option because it is the most convenient for most printing clients.

Although it is much easier once negotiated, this option requires a credit check. Some of my clients (particularly individual freelancers and small publishers, or even self-publishers) have chosen to forgo the credit check and just pay by Visa or electronic transfer of funds. (If they pay by Visa, they usually need to pay the 3 percent service fee levied on vendors by credit card companies.)

In contrast to the small publishers and self-publishers, most of my clients in large organizations operate on credit terms, and in some cases if they pay quickly they get a discount. Paying early, particularly for multiple jobs over a length of time, will also give these clients more clout with the printers. That is, the printers have more of an incentive to keep prices low to ensure repeat work, and to quickly correct any problems if a job goes south. After all, nothing beats a customer who keeps coming back with more work and keeps paying on time or early.

If you’re an art director at a large for-profit or non-profit organization, and you plan to do a lot of work with a particular vendor, you might want to look into this.

Alternatives to Credit

One of my clients always arranges for an electronic transfer of funds from his bank to the printer before the printer starts his job. In fact, a prior printer of his required 110 percent payment prior to the onset of the job. Is this reasonable?

To answer this question, consider first that a commercial printing supplier has to do a lot of work before sending the finished product to the client. This is a labor- and materials-intensive field. A lot of people need to get paid for everything from prepress work to binding to carton packing. Plus there’s the cost of shipping. But beyond all of this, a printer has to buy paper (and other supplies that will go into the manufacturing of the client’s project). If, for instance, the project is a long-run print book, the printer’s cost for paper might be sizable, and he might have to pay for this up front.

To get back to my client, the book printer required prepayment of 110 percent of the estimate to cover any overage. That is, a printer is usually allowed to bill for up to 10 percent more copies than you order (this is often negotiable). Printers produce more copies than needed to allow for spoilage in subsequent operations. That is, if they printed text blocks for exactly 1,000 books (of a 1,000-copy print run), and then 50 books were damaged in the bindery operations (spoilage), the total number of copies they could deliver could be fewer than requested. In most cases, if you read the small print of a commercial printing contract, you will see that there is a range (called overage and underage) that the printer can deliver and bill for. Industry standard is 10 percent over or under the requested press run.

So in my client’s case, he was paying 110 percent in advance to cover any possible overage as well as to prepay for the paper and for all printing and binding operations.

Now the printer in question could not arbitrarily overcharge, of course. At the end of the process, sometimes my client had a credit in his account. He could then have the printer send him the funds or keep them on account for the next print run.

Cash Customers Pay Before the Ship Date

In most cases, with most of my clients, who at the moment are micro-businesses and therefore are paying cash (rather than going through a credit check to “secure terms”), the printers (many of which I frequent for various jobs) all require a certain amount of money before any work starts and then the balance of payment, including freight, before any boxes of print books (or whatever printed product) leave the printing plant. This is the norm. My clients understand this and abide by it.

But Some Printers Don’t Work This Way

I work with another printer that just bills my clients. This is unusual. But it’s the printer’s choice. This vendor just takes my word that the client will pay. That said, this is a mom-and-pop operation, a very small commercial printing establishment. Presumably, they are willing to take the risk of nonpayment from time to time to bring in the business.

As you see, everything is negotiable.

Paying Earnest Money

Over the past several years I have been frequenting two book printers, one in the Midwest and one in the Northeast of the United States. Recently, both have gotten very busy. Their schedules have tightened up and their lead times have lengthened. During the same period I have brought in three titles from a small publisher. Based on price and the quality of prior jobs produced by these two printers, I have asked my clients to accept the longer than usual schedules. I have also asked that they sign contracts early in the process and even put up “earnest money” in the form of deposits on the three print books.

Is this reasonable? They think so. I think so. Some would say absolutely not; just go elsewhere. My approach, and the sales rep’s approach at this particular vendor, is that earnest money makes a job “real.” These three jobs can be put in the printer’s schedule early, and the printer will have an incentive to do a good job on time.

Keep in mind that this is not the first job for this printer. I have done a lot of work with this particular vendor, so I was able to pose this as an option and get both the printer and my client to agree. What makes this so important in this particular case is that my client’s (the small publisher’s) print book distributor will reject the book outright if the printer delivers copies even a day late. The schedule is firm and non-negotiable. In this case I think it’s reasonable to “sweeten the pot,” to give the printer the incentive to provide the best possible work within the schedule, when so many other customers have strained this printer’s capacity in the near term.

Others may disagree.

The Takeaway

Paying for a print job is probably one of the least glamorous or creative aspects of the job, along with perhaps arranging shipping terms. However, nothing gets done unless both the printer and the client are happy. So, in your own work, it behooves you to think like a business person and to consider your goals and the printer’s incentives to meet those goals.

Here are some further thoughts:

1. 1. Negotiate only after you have developed a good working relationship. Prior to this, I would just ask about payment terms and options. Everything is negotiable, but it’s easier to successfully negotiate with a long-term business partner than a vendor who has never seen you before—or may never see you again.

1. 1. This is a good time to ask about allowable overage and underage amounts. Don’t let this slide and be surprised by the extra costs on your final bill.

1. 1. Consider your goals. If the job deadline has wiggle room (unlike my client’s print books that will be useless if the delivery date slips and the distributor gets the product late), you may want to choose another printer rather than pay a deposit a month or so ahead of the job.

1. 1. Remember the hidden payments. A 3 percent fee to use your Visa can really add up if the job is an expensive one. An electronic transfer of funds (which is often, if not usually, free) might be a better choice.

1. Get in the habit of reading the small print in the contract. If your printer doesn’t provide a contract, you may want to ask for one. I personally do a lot of business just based on emails. More often than not I just receive contracts for large book printing jobs for my clients. But I do keep all of the email threads, in which everything is clearly spelled out, from the project specs to the freight costs, from the overage specifications to the schedules. Be safe. Do the same in your own work.

This entry was posted on Tuesday, May 21st, 2019 at 1:21 pm and is filed under Printing. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.