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How Consultants Collect Payments from Clients

By Michael Zipursky

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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22 thoughts on “How Consultants Collect Payments from Clients

  1. Hi Michael – great point. I moved to invoicing 50% up front for training engagements a while ago. I was a bit worried about a negative reaction – but I got absolutely none of it. I was surprised how easy it was.

    Another option is to offer a payment alternative: 100% paid up front for a 5% discount. A lot of companies automatically take this option because of the 5%. It makes life so much easier. And sometimes it’s easier for them internally. For example, it’s difficult for your sponsor to have his project cancelled if it’s already paid for!


    • Ian – glad you enjoyed the post and thanks for sharing your story. This is one area that can really relieve stress for consultants. I hope our stories will help more people take action and get the benefit of this.

  2. Ricardo Tano Feijoo says:

    Hi Michael – Great point indeed. I won’t accept to work with a client that is not willing to accept my terms of 50% up front at signing the consultant’s agreement. If they do not value me as a trusted adviser I much rather not work with this client. If you don’t have preset rules about the way you’ll like to run your independent business it will be like working at a corporation and change your business ways to please each individual client. When I’m being interviewed for a new assignment I’m also doing the interviewing of the client. I have no complications about telling a prospect that I can’t work for him and immediately ask for a referral. You have to pick your battles and honesty and respect are paramount.


    • Ricardo – appreciate the kind words. Thanks for the comment and very true indeed.

  3. I work with start ups and small businesses, even prior to my consulting business I have always billed at least 50% up front with a payment schedule so that all monies are paid by the close of a project.

    I have never had anyone question it or complain. Most are more than willing to pay in full as opposed to monthly payments especially repeat customers.

    • Brandi – definitely. It’s one of those things that consultants starting out have trouble with – the confidence to ask for – and once they do they see how easy it was and wished they would have done that earlier on. Like your site by the way.

  4. Ameen Ahsan says:

    The problem usually comes with the last payment. This is often after the client have received our work fully. They postpone this payment, as they have already received the work they wanted. This is usually 10-20% of the total value. Any advice?

    • Ameen – a couple of ideas for you:
      1. Ask for complete payment upfront – it’s not uncommon.
      2. Offer a discount of 5-10% of the total project cost if payment is made upfront in full.
      3. Wait to deliver the final aspect of the project when the client provides you with payment.
      4. Work with better clients that respect you and your work!

  5. Mj says:

    I typically bill three (3) months upfront and then I bill at the end of each month with a 7 day turn around time. When I consult for somebody, I typically as for an 18 month contract since my field is PR, Branding & Licensing and Nonprofit Management & Celebrity Events.

  6. Andrea says:

    Good advice. I always suffer as a software programmer to receive payments. I learned the hard way how to collect payments from all my clients because of bad communication.

  7. Shann says:

    I should have known better, but because it was a referral from a former boss, I agreed to bill biweekly with a 14 day turn around. It went fine for the first few months, but now have not received the last three months payment. The company says they are tied up in a contract dispute with another party that is holding up their revenue and that they fully intend to pay me. However, I’ve now been hearing “we hope to have it worked out this week” for the last month and a half. The question I have is what are my next steps as a consultant to try to collect?

  8. julie says:

    Hi there i am a wedding and event planner . Basically we had 2 consultation appointment with the client , the first appointment she was 2 hours late , but we felt give her grace but new that i would of charged her when the bill came to be given to her . the second consultation was to sign contracts which she had agreed to that’s why we were meeting . After 2 and a half hours of discussing every detail again, she decided to take the forms and let us know there decision later , i felt half confident , but it does depend on the business you are in . People do not want to pay out money its as simple as that . work should not be done unless contracts are signed , you need to have your backs covered as a business , people will walk over you if you let them . i will always give time to think about what they want to do , go away and think about it . but don’t ask for work to be done until contracts are signed . I have learn t hard lessons from clients , you have to be wise and very discerning .

  9. isaacdavisjr says:

    This is great advice. I live in an area where I have did myself a disservice by providing work for clients without getting any payment up front for the most part. I have spend countless hours working for them getting them results and when it came to pay something would come up. I have since changed that way of billing. If you are doing a great job and the client is happy with your work, then it should be no problem with them paying up front or paying half. Thank you for sharing your expertise with us.

  10. Rose says:

    Here is my issue with clients that do not pay. I’ve been in business for a little over one year and there is one GC as my client who is giving me most of my projects. If it weren’t for them I would not be a successful business. They have other vendors such as myself who submit proposals and have been in business way longer than I have. If I refuse to do work for them they don’t care, they have other vendors, and I can most likely close my doors because my other GCs do not send me enough work to keep busy. So although on paper it looks like my company is doing well and I am making money, I haven’t been able to pay myself in over a year and I’m constantly stressing over whether I’ll be able to pay my bills because my client is painfully slow to pay, they own me 195K and they send me a $10 check at a time, perhaps 1 payment a month. I’m in the red and although I nag about payments and I explain how important it is for them to pay my invoices on time, it falls on deaf ears. What else can I do?

    • Rose says:

      That’s a $10K check not $10 check.

  11. Kent Vincent says:

    Most of the stories I’m seeing here involve open invoices on work completed. What about purchase orders that are issued but not acted upon by inviting you in to do the work, thus preventing you from invoicing later against the purchase order?
    I had a 2-location client comply with the 50% upfront payment that enabled work to commence at site no. 1. A purchase order was issued to me for the balance that would cover mostly work at site no. 2. But a new plant manager came on board at site 2 who was never informed about the project and, while not against it, does not see it as a key priority of his own choosing. Any recourse here? Maybe commercial code T’s and C;s apply such as “justified reliance” or “estoppel”, I don’t know.

  12. candis says:

    What’s a good online merchant account to bill clients?

  13. Marqus Johnson says:

    So how should you handle a consultan that has given you this schedule of payment, but when you ask for a schedule of services to be rendered there are complications in providing that. Then when you meet his payment schedule you have lien put on your property because he has not paid the vendors he use.

  14. This is very helpful. I have often worked with consultants that bill monthly and invoice at the beginning of the month. When I started to consult I was hesitant to bill prior to doing the work then tried an engagement fee with one client (broke my project up into 3 monthly phases and billed the half a month as the engagement fee then invoiced every two weeks) – I had no negative reaction to billing up front so I simplified to billing the first month as the engagement fee for all future clients and… no one has asked for an alternative! It is important to value our work and ask for what we need. This spirit empowers me and creates a successful environment – the client gets my best work and therefore now I wouldn’t even consider otherwise (unless I was asked to in which case I would be open to their counter proposal). Onward!

    • That’s great to hear Simon and congratulations on the success with your business!

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