Slow Paying Customers

Jim: And the killer thing is, these are the same people who'll hold your feet in the fire to meet deadlines! Consulting guru Alan Weiss recommends a contract clause that trims 10% off the project fee for clients who pay up immediately. Surprisingly, the discount isn't the only incentive; by paying up-front, the person who authorizes the contract has ensured that the program cannot be cut. I have a question for you: How do you uncover a potential client's payment history?

Hi Jonathan! Thanks for the comment...and question. The short answer is ask them. The reaction is telling. Then verify. - bank references, credit checks (Experian, D&B, etc.), trade references, client visits (are they having trouble delivering?), etc. For consultants working with new or small companies, I've found bank and trade references most helpful. Banks will give you a good perspective on the likelihood of having money to pay and vendors will give you an honest statement of how timely your prospect has paid them. While these aren't guarantees you'll be paid, you can uncover skeletons or get comfortable with the information you gather. Dependant upon the size of the deal, I've asked for financial statements, a cursory audit, and interviews with key management. The big thing is to ask lots of questions and verify everything. Some prospects posture when you ask, but I've never had one that balked. The bottom-line is you're entering into a business deal. And both parties have a right to qualify the other.

That was excellent, Jim. Thank you!

I've have helped many a client with thier accounts recievables. But I'm not the only consultant out there there are funding firms such as mine that will get you the cash to keep running.

I am glad and sad all at the same time to learn that when I worked for a large company's Purchasing department, we were not alone in dealing with this problem which in that case meant hearing complaints from vendors and directing them to Accounts Payable It amazes me that with the software available, huge corporations can't pay their bills on time. There is one caveat to the person trying to collect the money here, make sure invoices have been issued properly. The larger the company, the more all information must be correct. If a huge company receives an invoice with no corresponding purchase order number, weeks have just been added to the payment process.