Everything You Need to Know about Payment Terms

August 22, 2022
6 Min Read

Outside of how much you're going to get paid for a brand deal, understanding when you're going to get paid is essential to creator financial well-being. Being able to predict when your contracts are going to pay on time helps you manage your business and creates financial stability. In this post, we'll be talking about what payment terms are, how to negotiate payment terms, and how to enforce brands to pay on time. And yes- payment terms are highly negotiable and should always be discussed before signing a contract.

What are payment terms? 

Payment terms are the number of days listed in a contract that (in this case) a brand has to pay you, the creator. It is generally called out in a contract in the statement of work under compensation. Payment terms are typically referred to as Net7, Net15, Net30, etc. Net means that in the number of days (actual calendar days unless strictly referred to as business days), the payee will pay you what is owed from the statement of work.

What are the most common payment terms for creators? 

As a creator, you should be weary of anything longer than 30 days (or Net30) from the date of content go-live. For freelance creatives (videographers, photographers, copyrighters, etc), the most common payment terms are Net 15 and less. However, for creators, we see (as indicated by our community database that powers our sponsored post calculator), that 56% social media content creators have extremely long payment terms of Net30 and up to Net150.

How do long payment terms impact my business? 

Payment terms are essentially you, the creator, extending a credit to a brand for a certain amount of time to pay you for the work that was done. The longer the credit is extended, the more likely the brand has to default on the payment if the brand were to go out of business before payment was complete. Since most influencers and content creators are categorized as contractors, you are considered last on the list to get paid out as contractors are considered less important than "secured creditors"- large financial institutions/banks. Read more about Bankruptcy Laws here.

As a contractor, you hold the risk for your own business to receive payment and that risk also includes the hiring brand risk. To protect yourself and your businesses income, you must understand the risk of holding long payment terms.

Can I negotiate payment terms? 

Yes and you absolutely always should! If a brand won't meet you at your sponsored post rate, they may be willing to pay you sooner for the content you turn over. By discounting your rate, you can incentivize them to pay sooner. The discount should not be more than 10% of the total job amount.

What we recommend is to not accept any payment term longer than 30 days. If you have a particularly prop heavy (say recipe or styled shoot) campaign, you are fully within your rights to request the brand to cover that cost ahead of time and then it's up to you how soon after they pay for the remaining campaign.

We request all invoices to be paid within 15 days of content go-live from a sponsor and when they don't pay on time, we assess a penalty onto their late payment.

Wait, you can penalize brands for not paying on time? 

Yes, and it's good business incentive to add a penalty for late payment. As a contractor, you do have to abide by your states Usury law to cap how much you penalize for late payment. You can find the rate of interest by state here. For international creators, google search "[country name] usury laws contractor" to find your rate of penalty.

Some creators, to avoid complicated math scenarios, just assess a flat rate 3-figure fee onto a late invoice. You do want to consult your state's Usury Law as they outline the total you are allowed to charge.

If you are going to penalize a brand for paying late you must...

list it on your invoice and have it listed in the contract under payment terms. If you don't have an invoice template, fill out the form below to download our free invoice template with example payment penalties listed. When negotiating payment terms, it's at this time you would tell the brand that "we assign a late penalty of 1.6% monthly and up to 16% per year according to the State of Georgia's Usury Laws" or whatever your usury law is.

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What if I do all this and they still won't pay my invoice? 

As a contracted worker with a contract, you are eligible to file a claim with the claims court. If you have tried resolving the issue but the brand has ghosted you, you do have rights as an individual to take legal action to collect payment.

Our last thoughts...

We personally believe payment terms for content creators should not exceed 30 days from the date of content go-live and anything longer than that are predatory practices on creators. If an agency or brand says they cannot pay before then because they have to wait for said brand to pay them in 30 days, we would just start raising red flags 🚩🚩🚩🚩. If they don't have enough money in the bank to cover your fee in a timely (i.e. UNDER 30 days) manner, it sounds like they have some financial issues that lead them to be a riskier business partner.

Afterall, every brand you agree to work with becomes a business partner, and as discussed above, you are responsible for the risk you assume from paying party's risks.

Payment terms are highly negotiable, and you should always pay attention to how long they are before signing a contract.

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