subject: How Often Should I Request Payouts For My Gig Sales? [print this page] The deadline for payouts is a very important problem for a seller and the following existing market trends should be taken into account:
The Seller's Commercial Strategy If a seller intends to develop products or services at a higher volume, with a lower selling price, then the payment date must be proportional with these factors and it can be settled earlier. The small price argument can be persuasive in this case, for the client to accept payments for the products in a shorter time.
The Nature of the Products or Services Sold and Their Positioning in the Market The products or services' positioning in the market may cause a reduction or, conversely, an increase in the payout deadline. If for the turnover products the buyer may accept a shorter payment term, things are quite different for niche or premium products.
In such situations, conscious of the long time when they can negotiate the payment, the freelance entrepreneurs can adjoin an additional margin in price, in order to cover the longer term of payment. The slow turnover of such products involves large payment terms.
The same situation can be encountered when it comes to seasonal products. Their life is limited to one season. In addition to the production costs and price, the seller includes the cost of storage or immobilization during the two seasons. The payment deadline may become insignificant in this case because it is usually limited to the season in question.
The Terms of Payment Offered by the Competition The products or service providers align their payment terms according to the competition offers. Deviations from this rule are found only with the huge market players like multinational companies, market leaders or vendors that sell branded products with high market share and consumer recognition.
They will take into account the payment terms offered by the competition and will set their own pricing strategy. Invariably, in such cases, the term is less than the one existing in the market.
At the opposite side, a seller who, in his desire to be present on the market, is willing to offer his products or services at lower payment terms than the competition may fall. His strategy is based on the market penetration at all costs and on placing its products in as many locations as possible
The Economic Situation in the Geographical Area Where the Product Is Sold
It can influence through:
consuming habits
the economic development of the area
inflation
the exchange rate.
To conclude a trade agreement, the parties may negotiate other commercial conditions and payment terms. The economical situation is as important as the other commercial conditions.
In the daily practice, the seller accepts perhaps too easily to increase the time requests for payment by the buyer. It is a practice commonly found in commercial negotiations with the more important clients. For contracts with fixed objectives or limited to a single gig task, increasing the period for payment may be accepted by the seller, and the commercial implications are minimal.
The situation is different for long term commercial contracts. Here, any flaw in addition may have negative effects on long-term on the producer.
There are many situations when the seller or agent has accepted perhaps too easily the request from the client to increase the payment deadline. There are also situations in which this point is agreed first on the list, without the slightest attempt to negotiate.
In time or throughout the course of the contract, the effects of this growth can be imperceptible and disastrous for the seller. To support a growing period for the payout deadline, he will probably be forced to look for additional sources of financing or to reduce the production costs.
