Independent Consultant: Common Pay Delay

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On previous questions, it sounds like other experts addressed that Net 30/1.5% is standard. Nonetheless, with my current client it sometimes took 3 months or more after the invoice. It didn't sound right to me, so when I spoke with my client, her response was:

 "All the contractors here wait that long, your lucky as some wait 6 months or more and it's unprofessional ask. You'll get your money when it is approved."

Is this common in the BI/Software development field or very rare?

Also, is it unprofessional to send a one line email reminder of unpaid balances every 2 weeks when a client is late?
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AlanConsultant
Commented:
Hi,

Sounds like it is time to fire that client.

If you can't afford to, then I suggest you aggressively build other clients to the point you can.

I have been consulting for twenty years - firing clients is something you have to learn being comfortable with.

Payment reminders are fine, but I doubt this particular client will pay any attention.

Alan.

Author

Commented:
Thank you Alan your right. Currently all of my clients are return customers (i.e., big companies) that usually call me for full time work. I will need to change my behavior and research how to acquire a bunch smaller clients so this doesn't happen again and never commit a full 40 to a single one.
AlanConsultant
Commented:
I try not to let any one client get to be more than about 15% of my income - hard to enforce sometimes, and often breached, but a good target :-)

Maybe increase your rates to that client.  Sometimes that can mean they reduce your hours, but often your net billing is the same or higher, and you have more time to work for other clients (or spend time marketing).

Good luck!
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JohnBusiness Consultant (Owner)
Most Valuable Expert 2012
Expert of the Year 2018
Commented:
"All the contractors here wait that long, your lucky as some wait 6 months or more and it's unprofessional ask. You'll get your money when it is approved."

Rubbish.  I get paid within 30 days and all my clients pay all consultants in 30 days.

If you need the client, best to say nothing more. But do look for other customers and ditch this one.
Fractional CTO
Distinguished Expert 2018
Commented:
Over the years, since my first contract in 1979, I've become more + more... clear about my billing practices.

1) Most of my clients pay for some services on a monthly basis, this might be web site admin (think hosting on steroids), maintaining high deliverability MTA farms, etc.

All these payments run via PayPal recurring transactions. If the client has no PayPal balance + the payment bounces, their services pause till they add balance to their PayPal account.

2) Ad-Hoc hourly work occurs when clients break something I have to fix or they request some work done.

This work bills on Mondays, for previous week.

No additional work occurs till their invoice is paid.

3) Anytime a client slow pays, they must pay a prepaid retainer of 5-10 hours (depending on work) before any work is done.

4) Currently you may have clients where this business model may not apply.

I use to fall into this category, then I began bringing on new clients that matched my require billing practices + firing old clients.

Only took a few months to clear out all slow pay clients.

So I'm with John, only I usually get paid 2-3 days after an invoice is generated, rather than 30 days.
JohnBusiness Consultant (Owner)
Most Valuable Expert 2012
Expert of the Year 2018

Commented:
/me chuckles.   My major client is one where I do Accounting Consulting. So I pay my own bills and so always on time.  :)
David FavorFractional CTO
Distinguished Expert 2018

Commented:
John's approach is best.

Handle the books at a company + always pay yourself on time!
AlanConsultant
Commented:
Not sure - must of my clients pay me a retainer / fixed monthly fee, so I get paid on the first working day of the month for that month.

If you assume all work is done on the fifteenth of each month, I get paid in minus fifteen days, versus plus twenty days (say) for most creditors.

Special projects are generally twentieth of the month following though.

Alan.
David FavorFractional CTO
Distinguished Expert 2018
Commented:
I do the same as Alan, my recurring monthly payments invoice a months billing, before services are used.

So payment for services occurs before any services are rendered.

The exception being ad-hoc work fixing random problems which have no specific repeat cycle.
Lee W, MVPTechnology and Business Process Advisor
Most Valuable Expert 2013
Commented:
It depends.  Some particularly large companies won't pay invoices for 60-90 days.  These are USUALLY extremely large companies with deep bureaucracies.  If this is a smaller client, it's not usually been a problem.

That said, my approach would be to change their billing structure.  If they aren't willing to reliably pay within your due date window, Bill in advance.  I did have one client that consistently was late so that's what I did.  Client's no longer late.

But if that's not an option I would be looking for another client/firing the client.
Top Expert 2016
Commented:
With my government contracts it was always 60 days from date invoiced. 30 days approval and then paid on the next payment schedule. I billed accordingly. If you use automatic billing software i.e. freshbooks.com They get reminded every 30 days. I believe the same is with paypal for business.
All the contractors here wait that long, your lucky as some wait 6 months or more and it's unprofessional ask. You'll get your money when it is approved.
 You're FIRED. Start tacking on late fees of 2% to 5% and they will wake up.

Author

Commented:
Thank you so much everyone for the awesome advice!!!! I will begin applying immediately. Have a great day!!!
JohnBusiness Consultant (Owner)
Most Valuable Expert 2012
Expert of the Year 2018

Commented:
You are very welcome and good luck
David FavorFractional CTO
Distinguished Expert 2018

Commented:
You're welcome!

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