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The Business Side of IT Consulting - Four Things I Wish I'd Learned Earlier in My Career

By Edited Nov 13, 2013 0 0

IT consulting has been my main source of income for the past 15 years.  Below are four tips I wish I’d learned early on.

 1. Clients rarely pay on time

 This isn’t a revolutionary insight, but it needs to be emphasized.  No money, no business.

 It‘s an accountant’s/accounts payable person’s job to take advantage of the time value of money. This is the idea that money now is worth more than the same amount of money later due to its earning capacity. In other words, they want to delay your payment as long as possible so they’ll have use of the money for a longer period.  What this boils down to is, if your invoice is net-30, a smart accountant will pay you on day 29.

To take it further, I’ve unfortunately had several clients interpret “net-30” to mean, “I’ll pay you whenever I want because there’s nothing you can do about it”.

In my experience there are three things you can do to mitigate late payment syndrome.

First, have a talk with your client’s accounting department and ask them if they have any advice about getting paid quickly.  In my experience, most are surprisingly candid and they may give you a few nuggets such as, send the invoice by postal mail rather than email or vice versa.

Second, mark your invoices as “Due on Receipt”.  I asked several accounts payable clerks how they process such invoices in practice.  Unfortunately, none of them said that they actually pay “on receipt”, but all said they send a check within 15 to 30 days.

Finally, if it’s a severe situation like consistent 90-day or greater payment lag, consider firing the client and moving on.

2. Clients will ask you to buy equipment & stall on reimbursement

Say you receive a call from a customer letting you know that an important piece of equipment, such as an Uninterruptible Power Supply, has failed.  Would you please pick one up at the computer store, drive over and install it?  “Sure”, you say “Glad to be of service”.  Trouble is, you’re shelling out a significant amount of cash, for which you may not be reimbursed for several months.  In effect, you’re giving the customer an interest-free equipment loan.

Unless you’re a hardware reseller, this can be a nuisance at best and possibly a drag on your working capital.

If you’re involved in such a hardware emergency, maybe have the client order and pay for the equipment online or by phone, leaving instructions with the vendor for you to receive it at will call.  

3. Client employees won’t adhere to “single point of contact”

As a consultant, if possible, you should have a single point of contact within the organization.  In other words, employees should refer their issues to a designated person, who will then contact you as needed.  If you’re there on a regular schedule, they might also keep a “honey do” list for you.

Trouble can arise when employees are unaware of, or refuse to follow the single point of contact directive.  As you might guess, this will happen with bosses who want their issue fixed NOW, but every client also seems to have a few rank and file employees who treat you as the help desk and don’t mind calling several times a day for minor issues.

 There’s not much you can do about the bosses (you want to keep the contract after all), but the best way to deal with a non-compliant employee is to simply refer them back to their internal contact.  The trick is to be polite, but insistent.  Perhaps remind them that the single point of contact system helps the employee by helping management keep track of issues and time spent in their resolution.

 4. Consumer clients may best be avoided

 Unfortunately, many consumer, or home-user clients have a, “You touched it, so every issue that happens later is your fault” mentality.  I once got an irate message from a lady I’d never met saying something to the effect of, “This stupid wireless router you set up won’t connect”.    Her phone number was similar to a client’s, so I called him and asked if he knew her.  Long story short, the caller was the girlfriend of a customer for whom I had set up a wireless network more than two years prior.  They’d changed the password multiple times without my knowledge or involvement, but the fact that she couldn’t establish a connection was MY fault.

For what it’s worth, a friend of mine is an auto mechanic and he says this kind of thing happens to him as well.  He told me he once had a customer for whom he fixed the passenger-side window.  A week later the car was overheating and the car-owner called my mechanic friend asking, “What did you do to my engine!”.

In Conclusion

Obviously the above is a small sample of issues that arise in the business side of IT consulting.  Stay tuned for the next list in the series.

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