Wednesday, May 7, 2008

The Financials of Consulting - Get a Down Payment

I found this story about consulting the other day that is happening right in our own backyard. A consulting company in Eagle has not been fully paid for services rendered to a recent campaign for an elected official. The consulting company is choosing to continue to do business with the elected official, but it is now on a "cash only" basis.

How we choose to operate our own consulting businesses is our own business. I'm in no position to say if this business arrangement is good or bad however, there are some lessons to be learned here.

  1. Always have an agreement for payment when doing business with a client. Set the terms on how and when you will be paid.
  2. Ask for a deposit prior to committing to the work. How much or what percentage is up to you.
  3. If you are not getting paid, stop the work. Inform the client you cannot continue to render services to them unless their balance is paid.
  4. If you are rendering services to a friend, family member or colleague, treat them the same as you would any other client. Don't give discounts. If they protest, tell them that by giving them a discount on your services they will forfeit their right to complain.
If you do your due diligence before working with a client and have an agreement for payment in place, you shouldn't have these problems. As always, make sure you get terms in writing. This way there are no questions and the expectations of both you and the client and clear.

1 comment:

George Seybold said...

I absolutely agree with this post. Far too often the exact terms of the engagement shift from dialog to dialog making the engagement more apt to fail. By clearly defining the terms and sticking to a payment schedule both parties are left with a clear understanding of the expected results.