I was asked the other day what I do when a consulting client doesn’t pay me.
My response: “I don’t have that problem”
“How can that be?” asked the other consultant. “Don’t you ever deal with clients that screw around and don’t pay you like they agreed?”
“No, I don’t” was my reply. I wasn’t trying to come across as cold and uninterested in this consultant’s predicament. The reality I went on to tell them is that clients can only fail to pay you if you structure your payment the wrong way.
Hedge the RISK
That is, if you don’t receive payment in one form or another before you start working you’re exposing yourself to unnecessary risk.
Consultants need to deliver for their clients and go out of their way to make sure their clients are happy. The flip side of that is that clients are choosing to work with a consultant because they trust them and believe them to be an expert.
Once that relationship is in place, and it usually is when your client is a solid company, then your client should have no problem paying you advance.
Whether they pay you for your whole month in advance, 50%, 33% or 25%…it doesn’t matter. What matters is that you’ve received payment for the work you are going to provide.
If you’ve worked with a client for a long time or have a very solid bond with them you can entertain the idea of getting paid for all your work afterwards. But even then it’s rarely necessary. If you’re providing results and doing what you’ve agreed that you’ll do the client should really have no issues with complying with the billing cycle you setup for them.
For New Projects
When you start working with a client, simply layout the billing terms that you use. For example, payment for the month at the beginning of each month. And payment should be made within 7 days of sending the invoice.
If you’re working with a large corporate client, their procurement or HR department may have a specific billing schedule. You can ask them to adjust it, but if it looks like it’s going to jeopardize your lucrative project with them…you’re usually fine working with their rules. Big established companies almost always make payment like clockwork as they have the systems and processes all in place.
For Existing Clients
What should you do if you have an on-going client that pays you after you’ve completed the work. If the relationship is going well and they always pay on time, you’re more likely than not to continue receiving your cheques right after your project is finished.
That said, I remember many years ago I was getting payment within days of sending my invoice to a client. I would finish a month and bill them at the end of each month. Things went beautifully for 2 years. Then one day I was told they couldn’t pay my last invoice. They were suddenly hit with funding trouble.
That’s not a good feeling.
To change an existing client over simply let them know that your company is using a new billing system to keep more organized and that all your clients are now paying you in advance or x percentage up front.
Again, if you’re doing great work you’ll face very little resistance.
It really sucks working hard to get your client results only to find out they can’t or won’t pay you. That lesson I learned was the last straw and ever since then I’ve used a new payment system.
It works great and I’ve never had to deal with the stress like I did that time.
The next time you find yourself feeling stressed out and worried about not getting paid, take action and make a change. Better yet, don’t wait and do it right now.
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