This might not be the industry standard … but we think it should be!
We get it … the live event industry has become increasingly unpredictable over the past two years. Between changing guidelines and regulations, as well as public safety measures, it’s hard to know if your meeting will go on as planned.
Understandably, this makes organizations nervous when it comes time to sign the dotted line and make a large financial commitment. Luckily, there’s another payment model. A scheduled payments approach prioritizes the client’s budget and event planning schedule, minimizing upfront costs and reducing risks along the way.
What are scheduled payments?
Scheduled payments are one of the many agency billing models that can be used for live events. It’s based on the “pay as you go” method of billing – rather than billing arbitrary percentages on a fixed set of dates, payments are collected as event planning milestones are reached and equipment rental costs are due.
Scheduled payments allow organizations to lower their upfront costs and long-term risk, while still giving them a predictable payment schedule.
What are the benefits of scheduled payments?
There is no question that a scheduled payment model creates value for clients throughout the event planning process. While there are a wide variety of benefits, there are four key ones that we think are the most important.
1. Lower upfront costs and limited long-term risk.
The 50% deposit and 50% net model has been the live event industry standard forever. But just because something has always been done a certain way doesn’t mean it should be!
While the traditional payment model uses two large, bulk payments, a scheduled payment method is weighted based on a number of factors, as well as when event costs are actually incurred.
Events incur a variety of technical production costs, including equipment rentals and subrentals, retail items, technical services, product coordination, event labor, logistics, and other event related expenses. While many of these costs are paid far in advance, the vast majority are incurred as the event nears – resulting in payments that are much lower early in the event planning process. In a scheduled payment model, this means a much smaller financial commitment is needed to get the event planning ball rolling.
Over the past two years, the ability to gather for large events has become incredibly unpredictable, and cancellations or postponements are more common than ever. A scheduled payment model decreases the financial risk associated with event planning, in case changes need to be made.
2. Pay expenses as they are incurred and drive budget transparency.
Scheduled payments should align with pre-defined milestones, rather than arbitrary deadlines. This transparency makes it incredibly easy to understand how much of your budget is being applied to specific tasks, equipment, or labor.
Of course, receiving an invoice every time a cost is incurred isn’t realistic – and would be incredibly tedious! Instead, examining the event planning period and identifying 3-6 significant milestones strikes the perfect balance. It provides a reasonable number of accountability checkpoints, with clear costs associated with each milestone, and a number of invoices that are easy to keep track of.
We hope that all events moving forward are able to go on as planned – but if a cancellation or postponement becomes necessary, the organization will have spent minimally, meaning no additional costs will be due, and no refunds will be necessary.
3. Predictability
Having smaller payments spread out over a longer period of time doesn’t just allow you to know what exactly you’re paying for – it let’s you know with plenty of advance notice when those payments will be due.
Knowing the date and amount for each payment due will make each one easier to plan for and fund.
4. Event flexibility
Anyone who has planned an event knows that decisions are made throughout the planning process – and are often changed multiple times! Expecting that each decision with a financial impact will be made the second you sign the dotted line is not only unreasonable, but unrealistic. Paying for the event as you go leaves room for flexibility in decision making.
Minor decisions that impact the budget can be calculated into the final scheduled payment, or accounted for as you go, while large changes will be accounted for in a formal Change Order, ensuring that you know exactly what you’re agreeing to before you pay for it.
Pro Tip: Make sure you define what constitutes as a “minor” and “major” change in the original Production Agreement and/or Scope of Work to ensure that everybody is on the same page and there are no surprises.
Conclusion
Scheduled payments are not the industry standard … yet. Especially as the event industry changes, clients deserve flexibility, predictability, transparency, and reduced risk. Utilizing a scheduled payment model creates a win-win situation for everyone involved and allows you to focus on what matters most … producing a engaging, impactful, and entertaining events!
At Encompass, we have unique backgrounds that situate us perfectly to produce high end and complex offerings. We’ve worked in broadcast television, touring entertainment, live sporting events, and countless convention facilities across the country.
We have technical design experience and a disciplined process in place that allows us to easily scale events and shift from in-person to virtual without angst. There isn’t much that’s beyond our scope and we love the intensity of putting on events!
If you’re a planner working to create an event, seeking help with virtual event technology, or simply want to learn more … we can help! Sign up below to receive our updates (we promise to keep your contact information secure and won’t “overshare”).