Should Your Client Pay For Ads (Or Should You?)

Transcript

This question comes in from Jim and Jim asks, Is it better to use your own credit card with an upfront retainer when managing Facebook campaigns for a client or to use their credit card to manage their ad budget? Also, do you run the campaign under your own ad account to protect your methods so they don't copy what you do and the contract?

OK. Jim, lots of questions here to unpack and tell you, but all of them. And the first thing I want to talk about is trust. So usually the amount of skin you put into the game, which should be charging this on your own credit card and then rebuilding them and maybe floating their payment for a while, because your payment terms are 15 days after the end of the month. You know, that would mean that you're you're basically paying for the ads 45 days before you get paid.

You have a lot of trust to want to do that. Now, there are some advantages to trusting somebody that you would float 45 days of their ad spend, and that is that you might get the credit card points that come along with it, especially if you're in the U.S. or in certain areas where they have one point per dollar spent. You could actually make some, you know, get some travel out of it. That's actually what my company ended up doing. But the floating the money for the customer, even if they're trustworthy, can be really risky and so are one dollar spent, equals one mile credit card.

Benefits are really worth the risk of them defaulting or going bankrupt or going out of business, especially in these times, because you could basically be on the hook for it. And you're not merely going to Facebook or Google and say, hey, we want our money back. That customer is out of business. Go go after them and get to work. Basically, whatever credit cards in there is, what is going to be the one that suffers the risk? And so I would really reserve that as a later on thing. If you had the cash flow to handle it and you have a long term customer relationship and you're pretty sure that they're not going to go out of business and they'll pay.

And that's something you can do. Now, one other thing you can do with it is you can have them pay in advance. Now, people are hesitant to do this, but if they if you say, hey, we have a ten thousand dollar a month budget, give us a ten thousand dollar some you know, it's 10000 dollars at the beginning of the month as well as our retainer. And we'll just manage it for you. That that actually works to your advantage if you get paid up front, because a new float, things for a longtime as well. So the other thing about the credit cards is that usually your payment isn't due until later. Right? So it's usually do at the end of the 30 day period, plus at the end of the next 30 days or so. That's usually 60 days after the first of the month that you'd have to pay that. So this would be different. You'd actually get the money upfront and then you'd have two months to pay the bill.

So that can help really help you with cash flow. And so it goes both ways. It cuts both ways. And that's really I guess you have to figure out your own risk tolerance. Now, I can tell you that my company took out took on a lot of that risk because we had a very conservative projection on cash flows and we were very conservative with our spending. And so we had some cash sitting there that could handle that float. And we found it to be to our advantage to do that. And so that was where we came up with a method. Now, I don't know how many other people do that, but that's how I came up with that method for my company and how we continued to do that and and basically cover all of our travel for the year by by having these pass through expenses, going onto a credit card. So that's part one.

Part two is, you know, how much access should you give your client in general? And is there worry that they're going to take your intellectual capital, your property and move on? So first of all, you are getting paid for the service. And so if they pay you for something and then they move on, they paid you to do the work. Not you know, you're not actually doing something proprietary. You're doing work for them and you're getting paid for it. So really, if the client leaves, that's their legal right. In almost any country in the world to do that. And there's nothing you can really do about it. Of course. I have some safeguards that I.

That I use in order to make sure that doesn't really happen, that I don't do all the work up front and then never get paid. The first thing we do is we do a billed fee for any account we're doing, and that is usually the equivalent about two and a half months of the retainer. And so if you're on a two thousand dollar a month retainer to do Facebook ads, you might charge 5000 upfront to build things out just to get all the assets in place and to get everything going. And that's that initial work. And so say that you get that 5000 dollars upfront to do the build out or half of it upfront and then they walk. You've at least gotten something for your time. And so that's that's usually how I safeguard against that.

And honestly, if you start with a client and within 30 days of signing the contract, they walk on you and steal everything you have, then that's really hopefully not a common problem. And it's really a very a there's something really fishy going on beyond the ability to protect it by a contract or the, you know, the overall ability for you to figure out how to fix it, because that's not normal. That doesn't happen often or ever, you know, and that's you know, maybe you needed to weed out the client the first place. Maybe there's red flags all along. Maybe they were where you were working with an individual instead of a company or, you know, somebody who was the owner of the company.

And they weren't they didn't have good business practices. Those are things that you might want. You know, you got to vet out in advance to see are they a legitimate business or not? Have they been in business for a while? Are they a startup? Are they a serial entrepreneur? Or these things that people say that often mean that they're either unemployable or unworkable, frankly. And so that also comes down to your level of trust. And I think that what you want to do is you want to work with companies that have that level of trust back in you, that you know, that they're they're not going to walk away from it.

Now, if you if you use that employ that principle, I would say, at least from my experience, 99 times out of 100, you're safe and you don't want that. The worry about it that one percent of the time was inevitable, whether you had the best contract in the world or you were the best in the world at delivering your billed fee or anything happens or you know that nine ninety nine times out of one hundred or nine times out of ten, whatever you want to call it, that shouldn't be an issue. And so I don't like to punish the innocent for the guilty acts of one person. And so that's why I usually just give people the benefit of the doubt. And then also I listen pretty hard when we're doing the sales process to make sure they're sophisticated enough advertiser or sophisticated enough business that they're not looking at this thing as something they can take and run.

And so I try to protect myself by by weeding them out. And frankly, in the process so they never become a customer in the first place. And so that's how I go about this. And hopefully that's something you can do moving forward. And I think this answer should help you understand how to how to look at this. It's all about trust and how you trust them, how long you've been around them and making sure that they're in it for the same reasons you're in it. Thanks, Jim. Look forward to hearing your next question in the future.

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