Thursday, July 19, 2012

It’s a Matter of Policy (part 2/2)

In the first article in this series I described some of the business rules or policies I’ve adopted for my consulting and training company, Process Impact, over the years. That article presented several policies I have regarding traveling. In this concluding article I share some additional policies regarding finances and client relations. I’ve mentioned some of these in earlier posts so I won’t elaborate on them in detail here.

On Finances

One of the first things I learned about consulting was to Set my price so I’m happy whether the client says yes or no. I’ll ask a higher fee if I’m not that interested in doing the job (like teaching the same two-day class for the 182nd time—literally!) or if the travel required is excessive or inconvenient. I’ll ask less if the destination is someplace I want to go anyway, if the opportunity sounds like a novel consulting engagement, or if it's a class I don't get to teach very often. Most of the time that high price scares the client away, If not, then I’ll grin and bear it and cash the check. One consultant I know was invited to travel from the east coast of the United States to Japan to deliver a half-day presentation. Not wanting to spend that much time traveling for such a short gig, he requested an outrageous fee and first-class airfare. The client agreed; off he went.

I also Quote an all-up fee that includes my expenses. This way I don’t have to provide receipts (potentially subject to client frowning and debate) for travel and lodging expenses, books, printing handouts, and the like. This policy has greatly simplified my invoicing. It also permits me to Request payment at the time of the event with a new client because I can submit the invoice in advance. I adopted that practice after having countless invoices get lost in clients’ accounting systems. This reduces my aggravation level and saves me the time of chasing down late payments. I also do not let clients get away with their occasional attempts to give themselves a discount for payment within 10 days. My terms are net 30 days (45 days for some clients), with no discount for early payment.

Another consulting colleague insists that New overseas clients must pay half the fee in advance. This is a good idea in case you have any concerns at all about whether you’re going to get paid, in what currency, in what form, and when. A Canadian friend recently told me that he suffered a significant loss because of changing currency exchange rates thanks to an American client company that waited months to pay him.

I’ve had a few problems with overseas customers who ordered products from my website but never paid the invoice. This small percentage of rip-off artists forced me to adopt the policy that Customers outside the United States must pay for products in advance. When the money comes in, the product goes out.

Just this past week I had an experience that caused me to contemplate a new business policy. I recently delivered a webinar at the invitation of a small company that sells certain software development tools. My invoice wasn’t paid on time. That’s not terribly unusual, but when I followed up I learned that the company had just closed and gone into receivership. I am never going to get paid. So now I need to consider whether to ask small companies with potentially shaky finances to pay me in advance for any work I perform for them.

Early in my consulting career I was invited to speak at a meeting of a local professional society. The contact person asked me what my fee would be. Not having encountered this situation before I wasn’t sure what to request. After I thought about it, though, I concluded that I Do not charge a speaking fee to give a presentation at a local professional organization. Delivering such presentations is a way for me to contribute to my profession as well as being a marketing and networking opportunity. Conversely, I Do not provide services to a company for free. If I’m delivering value to a company’s employees through a presentation or consulting, I’m entitled to be compensated for that value.

On Client Relations

Professional and personal integrity being important to me, I will Never misrepresent the work I’m performing for a client. A prospective client once asked me to state in my consulting agreement that I would be providing certain services. In actuality, though, he wanted me to do something different. He asked me to lie because he didn’t think his management would approve funding for the service he really wanted me to perform. I said thanks but no thanks. I don’t want to work for a company under false pretenses.

A client who hires a consultant for the first time is taking a risk. What if the consultant doesn't have as much experience as he claims and doesn't provide good advice? What if he's not a good presenter and the students don't find the class interesting or useful? I once brought a well-known consultant and speaker in to a company where I worked to teach a one-day class. She was very entertaining but provided little useful content, stimulated no class discussion, incorporated not a single exercise or practice activity in the class, and provided us with no reference materials to take away. The class evaluations were mediocre; we never brought her back in. To help my clients reach a comfort level with hiring me, I always Provide a money-back guarantee. My goal is for every client to feel that they would happily work with me again. Fortunately, no client has ever asked for a refund, but I'm fully prepared to reduce the fee if they don't feel they got their money's worth.

Periodically I receive e-mails or phone calls from people who have read one of my books or heard a presentation and want some advice about their situation. I’m always happy to Answer the first question for free. Sometimes this reply leads to an ongoing dialogue, but of course it’s not feasible to provide unlimited free consulting to everyone who writes to me. Therefore, if the person who contacted me has more questions, I will offer an off-site consulting agreement so that we can continue the discussion at my usual hourly consulting rate. Most of the time that terminates the discussion. Occasionally, though, it has led to an interesting short-term consulting engagement. (As an aside, I do always try to provide a substantive response to the initial question, so I’m frankly surprised at how seldom the questioners even say thank you. That seems rather rude.)

Once in a while a fellow software consultant will point a prospective client in my direction. I’m always grateful for these opportunities, but years ago I decided that I Neither pay or accept referral or finder’s fees for these kinds of connections. I figure that it averages out over time, because I am also happy to pass along such referrals myself. This is because of my policy that I Don’t take on engagements for which I am not a good fit. If someone can do a better job for the client than I can for a particular service, that’s who the client should hire. This policy notwithstanding, I do engage in business relationships with various companies to resell my products, teach my courses under license, or sell their products through an affiliate program. That’s a different kind of deal for which revenue-sharing is appropriate.

So there you have some of the policies that I’ve adopted during my fifteen years as a consultant and trainer. What are your own business rules? Please share any policies that you have found to work for you by posting comments on this article.

(If you found this article helpful, please consider making a donation to the Norm Kerth Benefit Fund to help a consultant who has been disabled since 1999 with a traumatic brain injury from a car accident. You can read Norm's story or donate here. Thanks!)


  1. consulting agreement depends upon the corporate terms, if the client organization is a private firm, whereas for government organizations, the agreement is based on the certain legitimate obligations.

  2. Thanks, Karl for all the great information on consulting policy. I appreciate that you do not charge for speaking engagements at local professional organizations. Also, very good advice on providing consulting services to small companies. Consultants are at a disadvantage when it comes to signing agreements for services without having a "preferred client list" similar to a "preferred vendor list" used by larger companies. Too bad there's no "Angie's List" for this purpose. :-)