On Your Own: Part 4
© Douglas E. Welch 1997
To paraphrase a ?robber baron? from earlier this century, ?Money
is just a way of keeping score.? This might be true, but to most
of us it is also the way to keep food on the table. Just like
the other business skills mentioned last week, anyone starting
a new consulting business must understand the importance of billing
and collections.
Collections rates #1 as both the most important and least favorite
parts of running your own consulting business. If you fail to
understand this, it will not be long before you are back working
for someone else.
Hopefully your clients will be the type who pay on time, but there
are a few ways to make payment easier for both them and you.
Get the check!
One of the easiest ways to insure that you get paid is to let
clients know you expect payment at each work session. Having the
check in your hand as you walk out the door completes the transaction
while you are still face-to-face with the client. It doesn?t require
that you go hunting for the person if they don?t respond to your
invoice.
Inform each new client of this policy when you are setting up
the original appointment so there are no surprises when you finish
your work with them. It also pays to remind your regular clients
of this policy on occasion.
Carry pre-printed, blank invoices with you to each call in case
a client requires an invoice for payment. You can then quickly
hand write the invoice, make a copy and receive your check. Give
your clients every opportunity to easily pay you.
Invoicing
If you work for clients whose business practices cannot adapt
to the method above then you will have to invoice them and wait
for your payment to arrive in the mail. Smaller companies will
often pay on receipt, but larger companies will often stretch
your payment out to the somewhat acceptable limit of 30 days.
It is important that you develop a system to track invoices and
remind you when they are overdue. Never let an invoice languish
or you may find that the company has lost track of your invoice
and will require you to submit another. Follow up on any late
invoices with a gentle phone call. Normally this will trigger
a payment from all but the most recalcitrant companies.
You will also need to build this payment ?float? into your financial
plans. You don?t want to be caught with no money in your account
and many outstanding invoices. Try to spread your cash flow over
your entire business year by watching your invoicing and collections.
Never perform additional work when there is an outstanding, overdue
invoice. You are in a position of power when a company needs your
skills. Demand payment on these outstanding invoices first.
If you find clients don?t pay on time, don?t hesitate to break
your relationship with them. Freedom to chose your clients is
one of the benefits that come from working for yourself.
Douglas E. Welch is a freelance writer and computer consultant
in Van Nuys, California. Readers can discuss career issues with
other readers by joining the Career Opportunities Discussion on
Douglas' web page at: http://home.earthlink.net/~dewelch/
He can reached via email at dewelch@earthlink.net |