Banking

Should this IT pro accept more work from a controlling peer who pays late?

This independent consultant's dilemma may sound like a no-brainer, but there are some benefits to the relationship. Read the details about this partnership, and then offer the IT pro advice.
I received the following question from TechRepublic member Francois Bezuidenhout:

I sometimes help out a colleague of mine - who is also an independent ITC - with some of his projects - either they are too big to handle by himself, or he is busy with one client and another crisis comes up - thus we are backup to each other.

My situation is that whenever he does work for me, I have my clients pay him directly, and preferably cash - thus there is no waiting time involved for him. My main priority is that my client is happy. I do not want a 'cut' of his money for work that he has done for me - I just want my client happy and leave them with confidence to phone me again when they have a problem.

My colleague on the other hand wants to be in control of everything - he wants to handle all invoicing and money matters regarding his clients (which is fine by me) except that some of his clients take up to 2 months to pay him. And he does not pay me out of his pocket - he waits until the client pays him, then he pays me. This makes it difficult for me, because I know I will get my money, but sometimes I feel like it is a lucky packet draw on what I am getting myself into whenever I do work for him.

To compound my problem - he wants to expand his business and wants me to take certain courses to be able to help him more with his work - which in theory I have no problem with, because the proposed value of work to be done will double my income (maybe even triple) - but I am concerned that this is going to be more late payments - only on a bigger scale.

My question would be - how do you and possibly other consultants handle this?

I can think of a few reasons why Francois might be a little uneasy about this relationship. The first is, as he mentions, the late payment issue. That isn't going to get any better unless he does something about it. Francois needs to solve that problem before he could even think about getting more deeply involved in his friend's business.

Some other things to consider include:

Exclusivity. With an increased volume of work, Francois may not have time for his other clients, or he may have to greatly reduce the attention he gives them. If the majority of his business comes from his friend, then his friend somewhat controls his career destiny. Having Francois on board might also free up more of his friend's time to look for new opportunities -- which could be business that Francois would have gotten for himself. Control. Francois mentioned that his friend likes to "be in control of everything." It sounds to me like the association could easily drift towards a manager-employee relationship. Pushing him to take some courses may be just the beginning. Francois will need to decide how comfortable he would be with his friend calling all the shots -- or else he will need to negotiate a solid decision-sharing agreement. Philosophy. Francois mentions a couple of differences in how he and his colleague run their respective businesses. What other differences will come out later? You don't want to wake up one day and find yourself working for a company you can't believe in. Friendship. A high percentage of friends that go into business together purchase their partnership at the cost of their friendship. Business relationships require a certain interpersonal distance, in order to be able to negotiate fairly with each other and keep emotions out of it. Business partners often become friends, but there's usually too much at stake for them to become real pals. Your mileage may vary, but I try (with limited success) to keep personal and business relationships separate. Perhaps that's not an issue in the present case -- I don't know how close Francois and his friend are.

The relationship could also prove beneficial. Partnerships, companies, and even entire societies form because specialization of duties and economies of scale work to their advantage -- sometimes. Other times, they just create unnecessary complexity and cracks for things to fall into. Francois will need to determine which is the case here -- or rather, to what degree each one is true.

What do you think Francois should do? Please answer the poll below, and then elaborate in the discussion.

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About

Chip Camden has been programming since 1978, and he's still not done. An independent consultant since 1991, Chip specializes in software development tools, languages, and migration to new technology. Besides writing for TechRepublic's IT Consultant b...

28 comments
andrewgauger
andrewgauger

Only way I could see this going well is if they embark in an equal partnership. This way they can both have shared control of the direction the company goes. Get it official, draft documents. Forego the relationship if need be. It doesn't sound like they have a healthy relationship, and possibly going into business officially could help draw boundaries. Go in with an exit procedure--if we decide to dissolve the partnership, we each get the clients we brought in.

Englebert
Englebert

When you do work for someone, they have to pay you. Regardless. And vice versa. Now, when you have this chat with your 'friend', he will balk and say something about giving this business to someone else or some other BS. Just stick to your guns. He'll come back to you with new found respect. After you've agreed verbally, then put it on paper. Remember, if you continue working with your current arrangement, this could be construed as contractually binding by law. One of the most important elements in a business relationship is building trust. And this isn't the way to go about developing it.

tony.law
tony.law

Agree they're both mucked up. A relationship like this needs to be above board, straightforward and above all symmetrical. So: if you're on contract to your friend, he (or she) pays your invoice on terms you've mutually agreed. Late payments to him are his problem, unless you've agreed in advance. And vice versa. Then, if he's helping you, if he's contracted to you then you pay him to his invoice. If he's contracted directly to your client then they pay him and you're not involved, though you could invoice him for an introduction fee. And if you're bringing in a third party to help out on one of your contracts, it's perfectly standard practice to "top slice" a percentage. You have the overheads of getting the business. And vice versa, of course. Get this sorted before you get into a more dependent relationship.

grace.ang
grace.ang

Cut down involvement with this friend. But go for the courses to up your value. Afterall, what ups your value eventually is beneficial for you. Look out for other partnering opportunities with other individuals that are not that controlling. Always look out for yourself. Be like him. Have clients pay you then you pay him. They are your clients, not his.

h.sherzad
h.sherzad

The friend is approaching the relationship on a professional level taking care of invoices and keeping track of his clients. To turn this into an associative relationship rather than a Manager-Employee thing Francois should increase his professional business awareness get more involved. This way if the partner refuses to work on the new terms it will be obvious that he has every intention to take advantage of Francois.

blarman
blarman

The main difference I see between the two is that Francois lives mainly without contracts, while his friend does. Since his friend has most of the leverage and wants the control, insist on a contract. In that contract, address your issues. Lay out a pay schedule (1/2 now, 1/2 later?) as well as right of refusal for new jobs. Depending on what state you are in (if in US), you may also want to explicitly define the relationship as two private entities. Last give yourself and your partner an out clause that says either of you can dissolve this contract on 30-day written notice.

Sterling chip Camden
Sterling chip Camden

Always have a contract. The friendliest relationship can turn sour, and when it does you don't want to rely on the friendship to make things right.

rpnadal08
rpnadal08

In today's economy when money is tight one would say "Go for it", but, that is not a good response. If you are helping him and he helps you the pay arrangement has to be the same. If not, the customer is the one who suffers! Knowing you are going to have to wait for your money will interfere with the quality of your work. The pay arrangement has to be the same on both playing fields, no exceptions!

dkwline
dkwline

Open discussion should be encouraged and any partnership should be negotiated beginning with a basic heads of agreement before a final working agreement is entered into. It should always end with a win-win,otherwise it will be pointless. Francois will also do well to remind his colleague that no man will make a great leader who wants to do it all himself, or to get all the credit for doing it.

Grant V.
Grant V.

First of all, both Francois and his colleague have their own business and it sounds like Francois may not be thinking this way. For example, Francois says "whenever he does work for me, I have my clients pay him directly, and preferably cash - thus there is no waiting time involved for him." This is not the way to do business, he is "your" sub-contractor, he should be invoicing you and then you invoice your client. Invoicing is the only way to run a business, asking for cash sounds a little shady to me. In my opinion, Francois?s colleague should be in complete control, when it comes to his clients, because they are HIS clients. Francois should do the same for his clients; otherwise they may not be his clients for long. As for his colleague paying late, does Francois invoice his colleague? If he doesn?t, that tells me that receiving payment is not urgent. Normally, clients receive 30 days to pay an invoice, which can either be lengthened or shortened depending on the scale of the project or the payment history of the client. If I was Francois, I would start invoicing the colleague with payment due in 15 days, then start charging interest after the 15 days. With regards to Francois taking courses to help his colleague expand his business, this is where Francois really needs to evaluate his future. Does he want to stay in business for himself or does he want to become an employee? If he remains independent and invoices his colleague for the work he does, I don?t think the late payment should be an issue. Francois mentions that this proposed work would double or triple his income, but he doesn?t say if the courses would benefit his business. If these courses will benefit his business, then he should go for it, but then decide whose business comes first, his or his colleagues. If the courses will only benefit his colleague?s clients, then he needs to make a decision about being in business for himself or an employee for his colleague.

The 'G-Man.'
The 'G-Man.'

YOU handle all invoicing and money matters regarding your clients (which should be fine by him). IF some of your clients take up to 2 months do not pay me out of your pocket - he waits until the client pays you first. But first - find the client who needs these new skills, get them and them only swan off with said client under your belt, alone.

reisen55
reisen55

With a talented colleague who was really an idiot savant. I let him do invoicing for a major client for a few months and he did not do it. 3 months later I asked about that and they had not received anything at all!!! I had to catch up that one, but worse, he then proceeded to do $7,800 of free work (because he never invoiced for that either or let them know he was doing it on billable time) for eight months, then suddenly drops a bomb. Also took eight months to deliver a Windows 2008 server to the client when I, earlier this year, had one into a new client within 2 weeks. Incredible. Colleagues can wreck your existance. My monetary loss from this relationship - and the major account involved was lost later on too - has been severe. Be careful.

santeewelding
santeewelding

What the hell is this business of the one having his client pay his friend in cash? And the other practicing this business of, "You get paid when I get paid"? They're screwed from the gitgo -- both of them. I engage anyone else, and I do, many times, there is none of that business. I run the show. [u][i]I[/i][/u] pay, and I pay up front. There is furthermore [i]none[/i] of this business of "you get paid when we get paid" crap from my "clients". Bit that bullet years ago.

HAL 9000
HAL 9000

But maybe it's just me seeing one [b]"Consultant[/b] absorbing another's for their own benefit. If they have sufficient Learning for their current clients why do they need to do more? Probably more importantly will the existing clients be willing to pay the extra? Is this required for his/her business? Sorry but I don't see much benefit in pricing yourself out of your current Client Base for the benefit of someone else. Col

Jaqui
Jaqui

It sounds to me like Francois' friend is looking to make Francois his employee. That's why I picked the talk with him about the issues openly. if Francois' friend doesn't like it, then that will likely be a good indicator that Francois needs to say "Thanks, but no thanks" to him.

Sterling chip Camden
Sterling chip Camden

All relationships have a give and take that sometimes feels out of balance. But business is business -- how did you answer the poll, and why?

CG IT
CG IT

inquiring minds want to know....

Sterling chip Camden
Sterling chip Camden

I don't give out verdicts, only advice and observations. I'll let Francois respond if he wants to share his decision.

DigitalAdmin
DigitalAdmin

First of all it sounds like he always pays. This is a good thing but what happens when a client stiffs him? Does that stay as his problem or does it become yours? If you do not feel out of balance try starting a company that you have to share ownership of. Ask anyone who has partners in a small business and they will tell you that someone always feels like they are doing more than everyone else or getting the short end of the stick. I say... Budget budget budget and keep a balance. Do not have the client pay him in this regard, have them pay you. Every 15, 30 or 90 days compare who owes who and payout. Debit one against the other, this is common practice. I can understand that you do not want to lose out on what you have. Being an ITC myself I have a lot of colleagues who I have had this issue with. Once the dust settled I ended up not getting paid on a lot of invoices. I later found out that some of them had been paid but I was told that the company did not pay him. As for the training, if you can afford it do it. Get in training whenever you can unless it is about programming usb toaster ovens or something else pointless. :)

DigitalAdmin
DigitalAdmin

sorry hit the submit button one too many times. please delete and disregard.

tr
tr

you are working for your collegue, not his or her client. You should manage your relationship with him/her as though he/she were one of your other clients. This means pay as you go while working for your collegue.

SKDTech
SKDTech

I would honestly sit the guy down and have a discussion with him regarding the issues already brought up as well as any others. Get it in writing and enforce any contracts you agree upon.

tbmay
tbmay

...this would have to stop. Believe me I understand the whole "don't make trouble for fear of losing business" thing. I darn near "niced" myself right out of business and into bankruptcy doing it. I'd have a heart-to-heart with the friend in which I said my business terms would have to apply to his clients just like my own. He'll either accept it or he won't. I DO smell something unclean in the milk here and how he deals with your terms will probably either confirm your reservations or put them to rest. Either way, don't hang yourself out to dry and not get paid.

Sterling chip Camden
Sterling chip Camden

That's a great phrase. I particularly like the double entendre with nice(1).

santeewelding
santeewelding

Go back to since before Hammurabi on a stele. Provisions of the Uniform Commercial Code were not devised and published yesterday. Neither are latter-day ways around and through it. I don't care if you are running a massage parlor. Chip -- and anybody else -- needs to retrench if he thinks, somehow, that "cyber" escapes it.

robo_dev
robo_dev

If there are issues like this when things are going well and the stakes are low, just wait until something goes really wrong on a million-dollar deal.

Sterling chip Camden
Sterling chip Camden

"Handle the difficult while it is still easy. Handle the big while it is still small." http://wayist.org/ttc%20compared/chap63.htm#3

Randy Hagan
Randy Hagan

Problems don't just fix themselves; more often they careen out of control. My standard response is: "I'm here to support you. But this is beyond the scope of our original agreement. Let's work this out so it works well for both of us."