If only it were thus: "To simplify complications is the first essential of success" -- George Earle Buckle, British journalist (1854-1935).
For PR agencies printing up invoices, there is a delicate balance to be observed: Give enough detail to tell clients what they are buying, but not so much as to bog them down
in minutiae.
These days, agencies increasingly are siding with the late Mr. Buckle. They are paring down statements, sometimes to the bare bone, in order to make client billing as simple
and concise as possible.
"I once worked for an agency where the owner made sure that everything was billed to the clients...and I mean everything," recalls Mike Hiles, now principal of the four-person
MPH PR in Los Angeles. "Each phone call was allocated a 'client code' that needed to be entered before dialing a telephone number. Postage was tracked and billed
accordingly."
Too much.
Now heading his own firm, Hiles keeps it minimal. He charges a flat monthly retainer based on a shared understanding of the results he intends to produce: "I just flat-out say,
'You are going to get this and this in terms of PR services for your monthly fee.'"
Rather than itemize all his expenses to clients, he just builds in operating costs as part of that flat fee. The alternate approach is just not savory. "It doesn't make for
good relationships with clients when they feel as if you're nickel-and-dime-ing them," he says.
While simplified invoicing may make life easier for the client, it also can be a boon to agency executives who would rather spend their time pitching stories than counting
paperclips. With a streamlined system, it becomes possible to scale back one's accounting efforts significantly. Consider, for example, SparkSource, a high-tech PR firm.
This mid-sized operation with 32 employees has just one financial professional sending out the bills every month, and that effort takes but a fraction of his working time,
according to Principal Andy Murphy.
"People here spend virtually no time thinking about billing," he adds. "We bill based on a flat retainer and don't add anything for phone, fax, email, etc. And we don't count
hours. We do this because we used to be clients, and agency billing practices drove us insane. I really don't understand why agencies would adopt the billing model of the most
hated business model on earth: the law firm."
It's not just about efficiency; it's about common sense. Why track labor in 15-minute increments if it's the results that count most? "Do clients really want to buy
time? That's irrelevant," Murphy says. "They should be buying results that help their business. If I get you into the Wall Street Journal, what do you care if it
takes me five minutes?"
In some sense, Murphy and others are, in fact, changing the emphasis by changing their billing methods. By moving to flat-fee bills, they are freeing themselves to spend time
and effort talking about the actual product.
SparkSource executives, for instance, hold comprehensive weekly status meetings with clients, followed by monthly written status reports. "They include media placements,
analyst briefings, analyst reports and speaking engagements," Murphy says. "If a CEO walks in the room and asks, 'Why did we pay our agency this month?' you can throw down a
status report and say, 'Here's why.' That's worth more to clients than a highly detailed monthly bill."
Others make this connection explicit. Ryan Wellnitz & Associates keeps the bills simple, but each bill is accompanied by a status report detailing what has been
accomplished.
"Some prefer a grid format, and some like more of an editorial type of report," says President Barbara Wellnitz. "Either way, we will say we interviewed the client, we wrote
the article, we placed it with the editor and when it is expected to publish."
While the client sees simple bills and detailed results reporting, another layer of accounting does occur internally, she adds: "The professionals here do track the hours they
devote to each project and, while the client won't see those numbers, the record-keeping does help the firm to chart its own productivity."
There are exceptions to the simpler-is-better rule. Wellnitz will bill such expenses as photography or travel at cost, and will detail those charges in the invoice.
At the 12-person firm SunStar, invoices simply show a 5% premium added to the retainer to cover such basic operational expenses as phone, fax, office expenses and the
like. It's a way of getting compensated for such items without going beyond the keep-it-simple billing concept.
"Clients love it. They like knowing the total cost in advance, knowing it is not going to be more or less than what it is," says VP/Partner Dan Sondhelm. Why 5%? "It's just a
rough estimate," he says.
Ultimately, though, this isn't a conversation about the depth of detail on a PR invoice, though it may look that way on the surface. The real issue here has to do with the very
nature of the industry. Is PR a commodity to be billed in increments, like a gallon of gas? Or is it a service whose success or failure is judged on the merits of its
outcomes?
Strip down the bill, and you position yourself in the latter category, freeing yourself to focus on stories placed rather than on hours billed. But this approach also creates a
new burden of responsibility.
Because hours don't matter anymore and only the outcomes are counted, "we work until we meet or surpass our agreed upon monthly goal," Sondhelm explains. For many, it's a new
way of viewing the equation.
Contacts: Mike Hiles, 310.234.3200, [email protected]; Andy Murphy, 781.418.2408, [email protected]; Dan Sondhelm, 703.894.1046, [email protected]; Barbara Wellnitz,
508.698.3374, [email protected]
To Bill Or Not To Bill?
Sometimes the depth of a PR invoice will be determined not just by the format of the bill, but by the underlying willingness of the PR professional to charge - or not to charge
- for a given service.
At MPH PR, a four-person agency in Los Angeles, Principal Mike Hiles recalls attending a trade show on behalf of a client. One year, he charged for travel, lodging and
incidentals. In another year, he ate the cost of attendance himself, rather than add it as a line item on that month's bill.
"My presence there was valuable and important, and part of me felt I should bill for that," he says. "But I also felt the client had been in a news lull for several months. I
was doing the monthly maintenance, but I felt things were not really happening for them, so this time I did not bill them for that trade show. I felt that was part of maintaining
the relationship."