If You’ve Ever Been A Consultant, You Understand This

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Today’s Dilbert described one of the most challenging problems small consulting companies face. I’m sure Jon, Micah, and I remember experiencing this many times when trying to build and expand Veloc-IT (though Micah probably still gets the pleasure of dealing with this as he’s still chugging along).

Click the image to see the full size strip at Dilbert.com.

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12 responses

  1. Avatar for Jesse Myer
    Jesse Myer June 12th, 2008

    Ah the pitfalls of either A. running a consulting firm or B. 1099 employee! I still haven't found to cahones to go 1099! W2 4 Life!

  2. Avatar for Heine
    Heine June 13th, 2008

    An EU study concluded that 25% of insolvencies are due to clients paying far past the invoice due dates. That is why the EU implemented a directive that allows one to fine companies for outstanding debts (> 31 days).
    These fines are rather large (7% + refinancing rate = ~11%). No reminders necessary :)
    If you are EU based and invoice to companies; Implement this and you'll see a sharp decline in invoices > 30 old.
    Some background info on www.afera.com/.../latepaymentsarticle.pdf

  3. Avatar for Chris Love
    Chris Love June 13th, 2008

    I saw this cartoon and said, Oh no he has been watching me for 8 years...Thankfully that time is fading in the rearview mirror.

  4. Avatar for Ayende Rahien
    Ayende Rahien June 13th, 2008

    Been there and seen that.
    Including in places that I would _think_ would know better.
    My solution in several cases was to say "thank you & goodbye".
    There are better things to do than fight the client for money owed.

  5. Avatar for Troy Goode
    Troy Goode June 13th, 2008

    I remember when I first started doing independent consulting work and thought Net 30 was the devil himself. It didn't take long to realize getting paid 30 days after I delivered a bill is often the best case scenario.
    Not an easy gig to swing if you're young and lacking sufficient savings...

  6. Avatar for Avonelle Lovhaug
    Avonelle Lovhaug June 13th, 2008

    I've rarely had this problem, although I see it talked about quite a bit on freelancing sites. What's my secret?
    - My terms are NET 10 days not 30.
    - No matter what size organization I am dealing with, I always make sure they understand that I will need payment in a timely fashion, or work on their project will be suspended.
    - In most cases, I ask for some portion of the payment up front (perhaps 10%). The rest of the project is broken down into modules with appropriate payment milestones that are equivalent to approximately 2 weeks of work.
    - If I haven't received payment in 2 weeks, I follow-up with the client to determine what is happening. (Sometimes I remind the customer that this is my paycheck, and ask how they would react if their paycheck was late.)
    - If I haven't received payment in 3-4 weeks, I stop work until payment has been received. Then when the money is received, I add them back into my schedule. However, slow payers no longer get priority.
    There is no reason why organizations can't pay consultants in a timely fashion.

  7. Avatar for Jon Galloway
    Jon Galloway June 13th, 2008

    Ouch. We should have at least got that "No Snortling" thing in there.

  8. Avatar for Arsalan
    Arsalan June 14th, 2008

    Wow.
    I thought we it was only in my part of the world that u did not get paid even after getting the job done.

  9. Avatar for Erikitha
    Erikitha June 15th, 2008

    Well, I have had this kind of problem too. I think we have to keep a way to get the money because the customers are always the same, they want to take adventage. In my last project, the customer stops paying, but I continued working. I thouthg that he would pay when the project finishes, but he never gave a intention to pay. Well, I decided to installed the system, but don't given him the source code (He was very interested in the source code). Well that was my key, I went there and I told him. The project it's finish here is the installation cd, etc. Then he asked me if the CD included the source code. That was my opportunity, I told him, well you haven't paid for that, but the system it's ready to use. We will finish in this moment with the project, you can use it. The source code is mine, if you want to buy it later, we will talk again about the price.
    Well, the customer began to try to asked me for a payment plan. I told him that I have waited for long time and if he wanted the source he had to pay on that moment. He was a little angry at the first time, but he saw I was tolking seriously.
    He gave the rest of the money on that moment!!.
    keep a key!

  10. Avatar for Mark Kamoski
    Mark Kamoski June 15th, 2008

    Ah, the fun of it all. I harken back to one of my freelance jobs as a trainer for a smallish "Technical Skills School". Things started getting late and later and later still.
    I had a quick sit-down right before my class with the operations manager. It was mid-semester.
    I said -- "you owe me 4K that is way over 120 days past due, I have sent countless reminders, made countless phone calls, and all I get is the runaround. What is going on?".
    He said -- "oh that... well, the ownership of the company has actually changed hands... although we still have the same name, you will have to contact the previous owner... but WE still want you to teach".
    To which I replied -- "I need a check today, after class, or I cannot teach anymore".
    To which he said -- "there is no way we can do that because WE don't owe you the money but we will pay future invoices and you MUST finish the semester or we will sue you".
    To which I said -- "goodbye" with a smile and walked out then and there. I never got the money; but, I never heard from them.
    That company went out of business (and they were national) about 1 year later. No wonder.
    100% true story.
    My phone service provider never once accepted the explanation "I am waiting on a check in the mail" as an excuse for not paying them.
    That's the only time in 10+ years that that has happened-- but, there comes a time when one has to draw the line.
    HTH someone.
    Thank you.
    -- Mark Kamoski

  11. Avatar for Davide
    Davide June 17th, 2008

    Of course you would never, ever, install a timebomb that would cause the software to stop working after, say, 35 days on a NET30.
    Nothing serious, just something that causes critical functionality to stop working, something that could be easily deactivated if the bill is paid, usually in the form of a .01 version upgrade to "get rid of a few bugs". A really good one removes traces of itself and continues working even if the client restores their backups.
    Only the evil Dogbet would do that.

  12. Avatar for Mikel
    Mikel September 10th, 2008

    Thats is why I am not a consultant at a small company..well at least for now :)