Delays by a client are simply a reality for most creative agencies. Whether its delay in providing prompt feedback and approvals, missing specific deadlines for providing needed materials or simply being unavailable over the course of a project, these events can drastically affect an agency’s profitability by demanding more time from the agency that is often uncompensated. Fortunately, there are ways to turn those delays into compensated time for your agency.
Have the Conversation
The mistake we see many agencies make is failing to address client delays early and directly. The reasons for this vary, but in most instances the failure comes from fear. Agencies are afraid to tell their clients “no”, to impose consequences or properly place responsibility for delay on the client. And this is understandable. These are difficult conversations to have in any situation.
The people at your agency tasked with having these conversations no doubt fear the worst: maybe the client will yell, maybe the client will accuse the agency of mistakes, or worse, maybe the client will terminate the project. And while all these things are possible, our experience is that they rarely happen. And in the rare instances they do happen, it’s most often the client projecting its mistakes on the agency., Most people know when they have been late or caused delays. And if addressed directly and professionally, most people take responsibility for that.
We recommend these conversations happen in person or by video conference, as people are less likely to be reactive in a face-to-face conversation. Phone calls are the next best option. And while an email might be the easiest way for your team to send a message, its the worst way of delivering information like this. Email invites parsing and rebuttal, and it’s easy to ignore.
Do the hard thing and have the direct conversation. And know that while the first conversation may be difficult, the next one will be easier. You’ll soon realize that your worst fears are just that: fears. But by speaking to the issue directly, you’ll be helping your client become a better client and keeping the project on track.
Build Relative Schedules
Before even trying to get paid for client delays, it’s important to ensure that client delays don’t create a crunch for your team.
Make clear that your deadlines are automatically adjusted on a day-for-day basis for each day of a client’s delay. While this doesn’t compensate you for the delay, it does ensure that your team isn’t rushing to fit three weeks of work into a three-day period simply because the client delayed in providing needed feedback.
You can accomplish a similar result by using relative dates in your schedule. With this approach, you’ll define dates relative to client-controlled events. For example, instead of stating that Phase 2 will be completed on March 1, say that Phase II will be completed three weeks after client provides all feedback on Phase I. Similarly, don’t commit to a specific launch date for a website. Instead, state that the project will launch four weeks after the client provides final website content.
Using these strategies will help prevent the client’s delays from becoming your problem.
Provide Pricing Alternatives
Even with conversations, you might need some contractual tools in your belt. With long-term clients, you know their general cadence and you should use that when pricing projects (even if your preferred cadence is different).
With newer clients, you won’t know how responsive they will be. When asked, new clients will often profess that they are a responsive group. They suggest that your desired three-to-five day turnaround times are just fine. But when the realities of competing obligations, vacations, levels of approval, and uncertainty hit, these commitments often fly out the window.
To address this, you can quote two prices in your SOW that apply to different scenarios:
- Price A. This is your normal price. The “fast” price. This factors in the project management effort and time you’ll need assuming your client meets your desired three to five day turnaround times.
- Price B. This is your normal price plus 20% (or other appropriate amount). This price reflects your experience with a typical “slow” client that takes seven to ten days to respond to requests.
When the project begins, your agency will invoice for Price B. And if the client is engaged and responsive over the course of the project, toward the end you will refund or offset the difference between Price A and Price B. All the while, your team should still be active project managers – reminding clients of upcoming deadlines and helping them stay engaged and working toward Price A. But the onus is on the client to do the things necessary to earn the lower price.
Collect a Delay Fee
Another way to ensure you are compensated for client delays is to build an express provision into your SOW that compensates you for each additional week the project is extended due to Client delays. A clause like this might read:
Client Delay. The term of this SOW begins on [date] and concludes on [date] (the “End Date”). Agency’s fee assumes that the Project will be completed by the End Date. If Agency is unable to complete the Project by the End Date because Client delayed in providing requested feedback, information, materials, specifications, or approvals, Agency may charge Client $[00,000] for each additional week (or partial week) required to complete the work (whether or not work is able to proceed) invoiced weekly in advance, due in 7 days.
It’s a good idea with a clause like this to go over it with your Client during the sales process or at least at kickoff. And your team should be managing to this consequence over the course of the project with continual reminders about the importance of, and consequences of not, providing timely responses. When picking a delay fee, don’t make it a small penalty. Make it meaningful – like the cost of keeping the core team for the project idle waiting for a response.
A variant of this is to set an idle day fee. As a deadline approaches, your team will remind the client of the consequences of delay. And when delays happen, charge the fee immediately.
Under either approach, once you invoice for this delay fee, you’ll know the client’s intentions quickly. Best case is they pay and you’ll be compensated for standing by. If they don’t pay, then you can safely invoke your pause clause so you can focus on more profitable projects.
Conclusion
Longer projects cost your agency more in project management time and resources. Even completely idle projects take up space on your agency’s plate that could be filled with active, profitable projects. To minimize delays, not only must you be an active project manager, you need to also have difficult conversations early and directly. Not only will these conversations make imposing the consequences in your contract easier, they will also teach your clients how to engage with you better.
If your team needs help managing difficult clients, contact us.
