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Put them on a pre-payment plan. No services rendered until paid for in advance.
In our present economy I don't start any large projects without getting a down payment of some sort up front. If a client were to tell me they can't make any capital payments (for whatever reason) they're telling me they have a cash flow problem they'd like me to help them with. Since I'm a consultant, not a bank, I have to walk away at that point. I've walked away and heard later that some other poor fellow got stuck for a lot of work, but not me. Time is my most precious resource these days. What other business gives away their most precious resource as much as we consultants often do?
Most of my clients are by referral. It can be quite embarrassing when word gets around that someone isn't paying their bills.
I have evolved some simple procedures to ensure payment:
1.) For design work 20% or $600.- advance payment and the reminder before delivery.
This avoids tyre kickers and not so serious clients. If the client declines the loss is less
if he/she does not pay at all.
2.) For manufacturing it is 50% deposit and the reminder 7 days prior to delivery.
Since implementing this procedure I have had no more outstandings.
Any potential client not agreeing to these terms does not understand that I am not a bank financing his project.
I do the same to my suppliers; 50% deposit and the reminder before delivery.
The only unhappy people are the non paying ones whom I can do without.
1.) For design work 20% or $600.- advance payment and the reminder before delivery.
This avoids tyre kickers and not so serious clients. If the client declines the loss is less
if he/she does not pay at all.
2.) For manufacturing it is 50% deposit and the reminder 7 days prior to delivery.
Since implementing this procedure I have had no more outstandings.
Any potential client not agreeing to these terms does not understand that I am not a bank financing his project.
I do the same to my suppliers; 50% deposit and the reminder before delivery.
The only unhappy people are the non paying ones whom I can do without.
Prepayment doesn't always work. Clients often can't make capital payments out until there is tangible product delivered. A way around this is defining deliverable milestones such as a project plan, design document or small phase of work to be payable upon completion. If payment is not received, future deliverables can be witheld. This does not eliminate past-due accounts, but can limit it significantly.
Lew Sauder, Author, Consulting 101: 101 Tips For Success in Consulting.
Lew Sauder, Author, Consulting 101: 101 Tips For Success in Consulting.
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