Consulting Fees Positioning Play

Service businesses tend to send an invoice for their services after they’ve put in the time and work.

Would you rather get paid up front or have to wait 15, 30 or 90 days to see the cash in your bank?

This is what your average client has come to expect. They pay their electrician, plumber and real estate agent in the same way.

That same client, however, has no problem paying up front for their bread, detergent or washing machine.

Ask yourself: Would you rather get paid upfront or have to wait 15, 30 or 90 days to see the cash in your bank?

Consultants that get paid before their work begins enjoy better cash flow, less stress…and as a result, typically perform better work.

There are few situations where your client can’t pay you upfront. They simply don’t because you haven’t approached the subject in the right way.

So my friend, what will it be? Where do you stand? Do you currently get paid upfront or wait to see the money?

Some food for thought…

If you want the ultimate guide to Consulting Fees check out our Consulting Fees & Pricing Guide.

 

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  • http://www.ianbrodie.com ianbrodie

    You’re right Michael – on all fronts.

    (a) it’s better to be paid up front.
    (b) clients expect to be invoiced and pay later
    (c) we never try anything different!

    To be fair, when corporate clients by equipment – let’s say they bought a ton of detergent, or a dozen washing machines for a facility they would expect to be invoiced and pay later then too. It’s just “the way things are done around here” when it comes to corporate purchases. Most buyers have no other way other than to pass things through procurement via the invoice route.

    However, I found there are a few things you can do.

    If you offer a small discount for early payment (as Alan Weiss advises) – corporates are often “forced” to accept it at pay early as part of their policies.

    You can often simply invoice early with relatively short payment terms. the net result is you get paid before you do the work.

    if you have some kind of satisfaction guarantee it can make early payment options easier to accept for clients as they know that if something goes wrong they can get their money back.

    The first time I did an early invoice was interesting. The buyer emailed me and said “I think there’s a mistake – it says 14 days from date of invoice – but that’s before you start”. I just mentioned the guarantee, and said how it helps preserve the relationship – nothing worse than chasing her because her accounts department are tardy.

    So she passed it on for payment and I got paid in advance.

    If you don’t ask, you don’t get…

  • http://www.consulting-business.com Michael Zipursky

    Ian – I was hoping to reply to your earlier (our comment system was down for a bit)!

    Spot on you are. This is why I said there are ‘few’ situations (when working with large corporations) where upfront payment can be difficult to arrange.

    However, as you’ve outlined so well here, it is doable. And that’s what I hope readers here will take away from this post. That there often is much more flexibility than you think. You just need to get creative and go for it. Thanks again for the thoughtful comment Ian.

  • bigmarketingguy

    Michael…I tell my clients upfront that I’m paid a month in-advance of the work. Haven’t had a problem yet! Some even pay several months ahead. Bottom line…if they know you, trust you and like you plus give them great customer service, there shouldn’t be a problem with getting paid up front.

    • http://www.consulting-business.com Michael Zipursky

      Right on! Well said and thanks for the comment.

  • Steve Gordon

    Michael, It’s all in the expectations you set with your clients…and the confidence you have when you set them (I recommend practicing in front of the mirror until you can say it strongly ;-)

    I started my current practice two years ago and made a conscious decision to be paid “upon booking” in all cases. I have only had two clients balk. In a weak moment I allowed one to be billed and regretted it until the end of that engagement.

    The other I let go over the issue. I now consider it a serious red flag if the payment timing is an objection. Either I’ve not built enough trust with the prospect or they aren’t serious about paying.

    Either way, we’ll both lose…better to part while we’re still “friends.”

    • http://www.consulting-business.com Michael Zipursky

      Steve – great point on the ‘red flag’…and you’re correct. It is about the expectations, confidence…and of course in the positioning and creation of value. If a client clearly sees that you are going to bring real value to the table, ‘they’ will often go out of their way to ensure you get payment on the terms needed to get the project started.

  • http://twitter.com/Twodeck Mike Todd

    As a new consultant I am working through many of these issues now – my challenge is not the lack of work – it is measuring the expectations of my clients and keeping them on-board. My specialization in distribution recruitment can take some time so keeping my clients informed, interested and positive about the process is my sleep-taker –

    • http://www.consulting-business.com Michael Zipursky

      Mike – you may find setting up a newsletter for your clients that goes out on a regular basis a great way to continually educate and validate your value to them. The other approach that works well is to schedule an email you send to each client on a weekly or monthly basis, as an example, where you update and educate them.

  • http://www.facebook.com/greg.hart.90410 Greg Hart

    Never start work without being paid first, I’ve been in business for over twenty years and I don’t start anything before I’m paid. You will find that is something most people will respect if you have convinced them that you can bring value to them or their organisation. If you can’t do that, it is time to move on.

  • Rookie

    I am relatively new to the “consulting” business, two weeks. It is an interim project for a private college I plan to teach at once approval for the course is granted. I am glad I stumbled unto your website. It assisted me with providing the client with a “moderate fee” as the project is minor (increasing enrolment in a current program). I will be purchasing some of your books, but what’s your opinion on moving forward with this project that now has a “phase two” as initial tasks were not completed to to collaborated efforts with another employee? I believe what you say is right, don’t want to fall into the trap of an established fee when other areas of the project require more resources and efforts…I’m greener than green in this area. Does anyone else who started out and are now established have some insight?