Seitu:

Q:  After nine years of working as a staff illustrator at an ad agency I was pushed back into the world of freelancing. My question is about companies that buy your invoices and pay you a percentage immediately and give you the rest(minus their fee) once the client pays them.

Does that turn off a client if I try to get paid that way? Especially a big ad agency?

A:

What Seitu is talking about is using a Factoring Service, or Accounts Receivable Funding.

It’s a way of getting money from your invoice sooner, rather than waiting for the company to pay.  Which can take forever.

The Factoring company sort of ‘buys’ the invoice you send to the big company. They pay you part, or most, of the the invoice amount right away.  They then collect on your invoice from the original company. They charge a percentage fee for this service.  There are tons of these services.

It’s fairly common in many businesses, such as fashion and manufacturing.  It’s mostly used for HUGE invoices. Like when you ship nine million bath mats to Walmart, and meanwhile have to pay your suppliers.

The idea is, of course, that you give up some of the invoice amount for getting money faster. Which can actually be smart. Especially if you have to delay paying your own bills because some huge invoice is late.

Seitu:  If it’s a big agency, I would guess that the people who hire you — the Creative Directors or Art Directors — would never even know you’re using a factoring service. And probably wouldn’t care, or even know what it is.

That is all handled via some paperwork in the agency’s accounts payable department, nine floors down. They basically don’t know you, or care. They never talk to Creative Directors.

I would guess that agencies are familiar with the factoring thing, mainly because printers and graphics suppliers and other such companies probably use it all the time. Agencies are notoriously slow payers.

And if anyone arches an eyebrow at you, the reply is, “I only use the service because you take so long to pay your bills.”

If you’re working with a smaller group, where the accounts person is just across the hall somewhere, I would recommend making friends with him. Or her.  And skip the factoring service. Smarter to coddle the one who cuts the checks.