And why we think they should be the event industry’s new standard
For decades, the event industry standardized around two bulk payments … a 50% deposit to confirm an event and a 50% final payment due near the event’s start date (depending on your pre-negotiated terms).
There’s no obvious logic to support this model.
Cancellation policies vary wildly.
It’s just how we’ve always done things.
Of course, just because it has been done that way doesn’t mean it should be. We believe the 50/50 model outlived its usefulness – and after learning more about Scheduled Payments Models, we bet you will too!
What are Scheduled Payments Models?
We know what you’re thinking … “What the heck is a Scheduled Payments Model?”
Scheduled Payments Models are also known as “pay-as-you-go” or “progressive billing” models. They are scheduled and collected as pre-determined milestones are reached.
Since milestones vary between organizations and events, not all Scheduled Payments Models will look exactly the same.
How Do Scheduled Payments Models Work?
In a nutshell, clients are paying for services as they are secured and/or performed. Payments are based on pre-defined milestones and when associated costs should be recovered.
At Encompass, milestones are broken up into four payments …
Scheduled Payment #1
The first payment takes place upon confirmation of the event and often accounts for about 5% of the event total. This payment includes the design and planning services that will begin as soon as the event is confirmed, as well as retail and subrental items that need a longer lead time to secure.
Pro Tip: Since a lot of costs for technical production are incurred the closer we get to load-in, this model typically results in lower front-end expenses. It decreases the financial risk at the beginning of the event production process, in case a postponement or cancellation becomes necessary.
Scheduled Payment #2
Then, forty-five days prior to the event’s start date, roughly 25% more of the event total is due. This covers ongoing design and planning services, confirmation of rental items, retail or subrental items that require a shorter lead time to secure, confirmation of specific labor positions, and travel for any onsite crew members that will be coming from afar.
Scheduled Payment #3
The third payment, due ten days prior to the shipping date, an average of 35% of the event’s budget needs to be paid. This payment includes the continued designing and planning services, additional rental items and general labor confirmations, and logistics for the event.
Scheduled Payment #4
The final payment, making up about 35% of the event total plus/minus any changes, is due thirty days after the event’s completion.
What are the benefits of a Scheduled Payments Model?
Transparent
Aside from financial benefits for both parties, this model offers complete transparency to clients (which is especially important to agencies). All payments align with pre-defined milestones, giving full transparency and understanding of how much of the event budget is being applied to different tasks.
Predictable
Scheduled Payments are also predictable. Smaller payments spread out over time allows everyone to know exactly what they are paying for and (more importantly) when they are paying for it. This makes it easier to plan for and fund each payment.
Flexible
Perhaps one of the largest benefits of the Scheduled Payment model is the flexibility it grants to everyone involved in the event planning process. It’s unreasonable and unrealistic to expect that every decision will be set in stone upon confirmation. This model leaves plenty of flexibility in decision making. Minor revisions can be calculated into the final payment, after the event is completed, while any significant changes will have a formal change order associated with them.
Making the change in your organization
Step One:
Get buy-in from your teammates. Any new process (especially when money is involved) requires 100% support from everyone involved.
Step Two:
Create/modify a calculator that aligns with your metrics and policies.
Pro Tip: There’s a lot of spreadsheet math involved in creating a great Scheduled Payment Calculator so we’ll provide a sample to get you started … just submit a request using the form below!
Step Three:
Communicate the model with your client partners. This is new to a lot of people so we recommend …
- Sending an email detailing the model (feel free to use our blogs to help with messaging)
- Include Scheduled Payment dates and amounts in your proposal template (near the signature line seems to help)
- Follow up to confirm clarity (with your buyer AND their accounting team)
Conclusion
It takes upfront effort (admittedly, we’ve spent a lot of time developing our calculator) and should be reevaluated from time to time; however, the process is proven to benefit both parties and is very worthwhile!
Scheduled Payments Models increase transparency and flexibility while reducing financial risk for clients and vendors. We think they should be the event industry’s new standard.
Scheduled Payments Calculator Request
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”).