Making sense about the Conde Nast freelancers payment story.
If you follow any journalists on Twitter you surely have come across the story below.
Freelance writing is a lucrative gig for many reporters, photographers, models, editors and more in the fashion…fashionista.com
As someone that works as a staff accountant that oversees AP and AR team for a mid-sized manufacturer and distributor in NYC, I might be able to shed some light and give some context for this story.
First things first, discounts for early payment are extremely common in business to business (B2B) transactions. The most common terms are 2/10 Net 30. Which means that if a customer pays within 10 days, they can take a 2% discount off the cost of goods. (Normally insurance and freight charges are not included in calculating the discount amount) We also Have a customer that has terms of Net 45 with us but allows us to us C2FO to have early access to cash flow for a slight discount. Just to point out the discount is only for payment that is made before the due date, so we never had to give a discount in order to get paid on time. Though I have never seen trade discount in a contract with a freelancer as my company usually had Due Upon Receipt or Net 30 deals with them.
Which leads to what I think is a bad misconception with this story, and that is freelancers will have to give up money to get paid on time at all. Without knowing Conde Nast’s usual payment terms for paying freelancers and what it says on the new contract there is no way to know if the general terms will change at all. Though if I had to take a guess, Conde Nast probably pays on either on a Net 30 or Net 60 timeline. So this change might just be a way to get paid on day 10 instead of day 30.
Which is why it is important that when you sign a contract or send an invoice always make sure that the due date and terms are clearly written. Remember the 30-day rule that comes with the new NYC freelance law is only valid if there is no payment due date written into the contract.
Also, one thing that catches my eye about the article is that it is a vendor contract and not an independent contractor contract. Conde Nast might do this differently, but vendor contracts are usually for people that deliver supplies, raw material, and equipment while a freelancer writer or designer would have signed an independent contractor contract. So it is a possibility that Fashionista got the wrong contract.
If this new contract is for freelancers, the details are going to matter in determining how bad this deal could get. If Conde Nast moves from being let’s, say net 30 to net 60 and takes 5% discount in order to be paid in 15 days that would be really shady and disgraceful. The lookout should be is Conde Nast going to use these new contracts to force freelancers to take a deep discount or fear that they won’t see their funds for 90 or 120 days.
However, if Conde Nast keeps their current payment timeline structure and just add something like 2/10 into their contracts then it probably won’t be too bad and could be beneficial for both parties. Until there are more details, it is hard to know what is changing and what is staying the same.
It is also possible that Conde Nast is simply trying to get all of their outside vendors on the same payment schedule as that would probably make cash flow management much easier plan and budget for. Until there is more info is released like a current contract, and a new one that can be compared lets put away the pitchforks. If the deal ends up being really bad for freelancers, we can take the pitchforks back out and march towards One World Trade Center.