When Clients Don't Pay – Consulting War Stories

Also find Sean Hull’s ramblings on twitter @hullsean.

It’s a cold cold winter out there, so as they say you need money to keep the lights on? Yep, that’s true whether you’re a small business or a consultant. Everyone has to pay their bills. Or do they?

It’s an unfortunate fact of life in business, but sometimes there are differences. Disagreements about deliverables, timelines, milestones, and deadlines. But when all the work is done, there are still sometimes differences over dollars.

Over the years most of those I’ve managed to work out with clients, but there were a few that went sour. One case was with a large entertainment firm. The music business is one that I hadn’t interacted with much before. For these guys I’d done a few days work in the past, and was paid promptly. Now they were in a bit of a jam. They called me up and asked if I could help.

Related article: A CTO Must Never Do This.

These types of emergencies often come at the worst times, and I explained that I was already juggling a few other things. They pleaded for help, and I relented. I carved out a full day of time for them, explaining the day rate and so forth. While on the phone though, I expressed caution.

[quote]I understand that your issue is urgent now, what happens if your needs change in the next 48 hours, I asked? Not a problem they replied, we can use your help anyway, so we’ll book you either way. Fast forward 48 hours, work canceled & client won’t take my call.[/quote]

Great I thought, verbal assurances. That works for me, I thought.

Fast forward 32 hours, and I receive an email saying the problem is resolved, and offering a “kill fee” of which I knew nothing, and which was never negotiated or discussed.

Along comes the day of reconning, and I call the client. They don’t take my call. Shortly there after I receive additional emails. I reply and explain we should talk on the phone. Still the client can’t find the time to pickup the call.

So I judiciously put together an invoice for the work. I email it directly to finance, and CC all parties. From there I get responses ranging from disinterest to denial. Over the coming months I periodically resend the invoice, but to no avail.

Or was it? I actually feel that this experience is to great avail.

1. Small disagreements foreshadow larger ones down the road
2. A relationship between client and vendor is a mutual one. If parties can only pickup the phone when they need something, then things are out of balance already.

Sure I lost a day & the fee associated. But I gained a lesson.

Patience and polite persistence

I firmly believe that being patient and persistent wins in the end. Sometimes clients have hiccups in payroll or budgets. Keep communication lines open.

Freelancers & consultants: Grab my Consulting 101 Guide.

Appealing to fairness

If you maintain a healthy relationship with your client, then appeals to fairness are normally heeded.

Appealing to promises

Emails are important to keep a paper trail of agreements. Communicate clearly and often so you know when you get derailed, and can refer back to what was agreed previously.

Popular: AirBNB didn’t have to failed – AWS hosting outages.

Setting precedents & expectations up front

This is an important one, that freelancers and consultants alike sometimes forget. Setting and agreeing on expectations is key. Often details are in the fine print or left out completely. So ongoing communication can iron out those differences or bring them to light.

Want to hire the best? Read our DBA Interview Guide.

Getting a protective deposit

If you haven’t worked together before, a deposit makes a lot of sense. Executing on this is more than a show of faith. It underlines that accounts payable is on board with your hiring, and you are now in the payments system.

Related: Hiring is a numbers game

Sizing each other up

Websites provide the first representation of you and your client to each other. How you carry yourself and how they feel meeting them face to face is important as well. Ideally you’ll meet each other at the client’s offices, where you may meet others on the team, and put names to faces. At the very least a skype call will go a long way as well.

Managing spend – communication along the way

Keep a close eye on invoices. If a client is getting behind, resolve it before continuing to work. Deadlines are mutual in a business relationship. Yours to complete work by a certain date, and theirs to pay by an equally agreed upon time.

Read also: Real Disaster Recovery Lessons from hurricane Sandy.

Never go to court – defer to the handshake & gentleman’s agreement

I know the lawyers out there may think I’m naive. But I’ve been in business a long time, and I believe a handshake means and says a lot. Also common sense language & contracts, in the form of emails and so forth are better than heavily legalese ones that no one but a lawyer can understand.

What’s more going to court has a huge cost in time & stress. Don’t go that route. I also think it appeals to clients knowing that you’re not the litigious sort.

Want more? Grab our Scalable Startups monthly for more tips and special content. Here’s a sample

Fear a zombie invasion? Try algorithms & bots

Automate This - How Algorithms Came to Rule Our World - Christopher Steiner
Automate This - How Algorithms Came to Rule Our World - Christopher Steiner

Also find Sean Hull’s ramblings on twitter @hullsean.

Have you read any of those tongue in cheek books on how to survive the coming zombie apocalypse? They’re funny in their own way, and reading Chris Steiner’s book it was the first image that popped into my head.

Countless industries falling to the algorithm invasion

I thought i followed automation & computer algorithms closely. Turns out this stuff is touching a *LOT* more industries than I even realized. Not only touching, but altering and changing the landscape of jobs. In many cases supporting & helping folks do their jobs better. In others they’re actually supplanting jobs.

Wall street – very high speed trading

The biggest industry that algorithms first touched was wall street. Rewind the clock back to 1980 and enter Thomas Peterffy. He went about applying mathematics to commodities options trading which to that point had been traded on gut instinct. The math won out, and he went on to become a so-called market maker on wall street.

The automation & computerization of trading continued at breakneck speed into the 90’s sucking up all the best math & science minds that the Ivy schools could churn out.

[quote]In a world where an increasing amount of power is being accumulated by those who can fashion and leverage algorithms with skill & finesse, our future looks to be one filled with bots judging us, routing us & measuring us. – Chris Steiner[/quote]

Enter high frequency trading and you know where this is going. We’ve weathered the near collapse of the financial system in 2008, and endless market shocks at least some of which can be traced back to algorithms. Today a full 60% of the world stock markets are run by high frequency computerized trading.

On a related note, check out Eli Pariser’s book The Filter Bubble which talks about search, and how algorithms are crafting and steering what we see and read.

Software & the creation of music

Our next stop is a strange one. We meet David Cope who, with a fascinating mix of music & love of writing software, built code to compose music. He then even played it at concerts. He astounded then infuriated critics who couldn’t tell what was composed by a human and what by computer. Some even loved the Cope code generated music more!

And after that it just gets stranger. He introduces us to the music industry software that analyzes music for it’s potential to be a hit. Can such software find unknown geniuses? Does it do away with the job of the A&R man?

It sure poses some tough questions. If such software can make record companies more profitable, no one will scoff.

Health care takes a lashing

Next up software touches the art of medicine, and the sacred science of diagnosis. First we’re seeing software that assists doctors, helping find cancers and analyzing symptoms & databases of diagnosis. But what of the day when such software does the job better. It’s already happening.

With rising health care costs, improvements in health care diagnostics at lower cost will be a huge boon for the industry. Spotting cancer better & faster?

Physicians beware.

Interested in management & business? Checkout A CTO Must Never Do This a war story about life in the devops trenches.

NASA & sanity in space

Before astronauts are sent off into space, they are given endless psychological evaluations. They’re asked questions, and probed on and on. Turns out there are a few different psychic groups people fit into, and if you mix the wrong ones, it can be volatile combination.

Turns out algorithms and software help NASA evaluate people, and ultimately makes those missions safer by pairing compatible and non-volatile personalities. When in the cramped confines of a spaceship it can be life or death.

Invasion of the Math refugees

As criticism, towards the end of the book I felt Steiner lost his way a bit. He spent lots of pages going on about the exodus of engineering, math & science talent to Wall Street, for what he saw as little gain. Whatever your opinions on that may be it didn’t seem to relate to the overall theme and served as a bit of a distraction.

As the financial industry has since contracted, he says that problem has subsided and talent has moved back to startups where innovation happens. As he says it’s certainly where the jobs are.

Ultimately I would have liked to hear some of his critical thoughts. He brings much to our attention, but doesn’t offer much in the way of caution or alternative ways forward.

Want more? Grab our Scalable Startups monthly for more tips and special content. Here’s a sample