Collecting Payments from Consulting Clients

[Wes Bucey]

In recent economic hard times, I've heard more than one consultant talk about a client who "stiffed" him or otherwise put him low in priority of getting paid for work performed.

As a business owner, I've developed a variety of strategies for collecting money due my business. Some work better than others. Before going further, it's important to note some clients and customers REVEL in victimizing and humiliating small suppliers of goods and services. The best way to protect yourself against those folks is to avoid doing business with them in the first place. The second best (against willful deadbeats) is to pull the trigger and sue. All the rest, you just want to put back on the track and get paid and maybe get more business from them.

Many Covers are independent consultants. Getting business is tough enough without having to fight tooth and nail to collect what's owed you.

An acquaintance of mine, Jim Ziegler, counsels independent consultants and has some free literature to help them stay on a level playing field. The way Jim makes part of his living is running an umbrella corporation (Professional Association of Contract Employees) for independent consultants and contract workers which you can read about in this link. There is nothing Jim offers which a competent consultant can't do for himself; it's like a choice of mowing your own lawn or hiring a service. If you are an independent consultant, you should research Jim's company and its services for yourself. Don't hesitate to ask him for referrals to talk to any of his clients before agreeing to sign up. It ain't free and I don't get a dime. I just consider him a friend, like I consider many of you here in the Cove.

I'm not touting Jim's service in this thread - that's just background information leading up to a discussion about a collection letter he recently developed and used to collect money due several of the consultants his company represents.

Jim describes the event and a copy of the letter in a recent free newsletter available at this link.

I think the letter is a marvel in putting a velvet glove over a steel fist. There have been times I wish I had written anything so elegant and effective.

Jim's lead-in to the letter begins (reprinted with Jim's permission for Cove only):

Originally Posted by P.A.C.E Newsletter-1-12-2005

From The Trenches
A Slap Upside the Head: The Education of a Deadbeat Client
Every once in a while someone needs a reality check and a slap upside the head. This article is about a reality check I had to deliver to one of P.A.C.E.'s clients. The client was showing signs that it might default on its obligation to pay for consulting services performed by several P.A.C.E. Division Managers.

Defaults by clients are rare. Truth be told, in the past six years P.A.C.E. has experienced a few defaults on payment, but the defaults have always been by intermediaries such as staffing vendors and gatekeepers; never by a direct client.

P.A.C.E.'s Division Administrators take pride in maintaining excellent relations with client companies, so it was with some alarm that we began to notice the classic tell-tale signs of an impending implosion: chronically slow payments, lame excuses, and e-mail messages peppered with weasel words.

Below is the letter we sent on a Thursday afternoon by e-mail and also by certified post. The following Monday we received a conference call from the owner of the company and the owner's legal counsel with the good news that full payment would be forthcoming.

Jim asks that I NOT attach the text of the letter here, but it is available at the link.

[bpritts]

Wes,

Based on a very quick scan, this looks like an excellent strategy.
I will be discussing its application with my colleagues, as I do have
a client who has left me in the lurch.

Will let folks know how it works out!

Regard,s
Brad

[Marc]

Good thoughts, there.

I've been lucky. I've only been stiffed once, but it was only for about US$ 500. It was back in the late 1990's.

I've had a few late payers, and I still do some stuff from time to time for a couple of them - I now require payment 2 weeks prior to visiting a company if they were 'slow' payers (2+ months) in the past.

[cncmarine]

Not Bad


But seems long winded for the consulting business