Consultants: Tips for Collecting Fees

by Matt Gill        

You’ve done the work, your client is thrilled, you’re talking about extending your engagement on a new project, but there is one small thing – you haven’t been paid.

One of the biggest headaches of being an Independent Consultant (IC) is collecting fees.  If you are consulting to large companies the person who processes the payment is probably not your client.  You could be doing your consulting in Boston but accounts payable is l in Dallas and the approval process may go through as many as four or five people.  With smaller companies it can be equally as difficult to get the CFO to sign-off on invoices.  So here are a few things to do to help you get you cash in a reasonable amount of time.

1.  Negotiate up-front payment terms and be sure to get the names and contact information, location, and role of anyone involved in the approval process.

2.  At the onset of the engagement, emphasize to your day-to-day client the importance of your invoices being paid on time and ask if they will help if you get stuck anywhere during the process.

3.  For a new vendor, there is usually a lag in the first payment.  Get ahead of this and find out what the process is for adding a new vendor and make it part of the first day of your consulting work.  This is critical as AP will test new vendors on the first invoice, and it will set a precedent for how far they can push out your following invoices.

4.  Put together a process that you follow with every client:

1. Send your invoice.
2. A reminder of the outstanding invoice at ten days prior to the payment date (some companies only run checks on one day of the week and ”ten days” gets their attention ahead of the check run).
3. A third reminder the day payment is due (only if you haven’t received payment).
4. If you haven’t received payment within two days send a note to everyone involved in the process.
5. If after four days of not receiving payment enlist your client for help.
6. Be persistent; it’s your money.

AP folks are getting collection calls and reminders all day; figure out how to set yourself apart with these communications.  Anyone willing to share what has worked for them would be welcome in the comment section.

Most clients will pay on-time and understand the importance of cash flow for an IC.  You will run into slow payers and those who will take as long as you let them.  The key is to understand the process and create internal partners and a system that keeps you top of mind.  And above all else, the squeaky wheel gets the grease.

I’d welcome any other tips and advice on collection strategies and tactics that have worked for you.  If you would rather connect directly please invite me to join your LinkedIn network with the subject MENG Blog, www.linkedin.com/in/matthewwgill.

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