Independent Thinking Blog

Getting Paid

Getting paid matters.

Employee. CEO. Consultant. Entrepreneur. Vendor. Subcontractor. Add your title here. However you’re classified, it’s nice to see the pay check, consulting fee, sales transaction, and so forth, come through.

A client called me on Friday and her first words (after hello) were, “I hope you’re not worried about getting paid.”

I laughed. You see, I was working on a quick project for her simultaneous with her trying to get my purchase order through channels. And no, I wasn’t worried.

The timing of her remark was on point as there had just been a discussion in one of my private Facebook groups about getting paid. It broke down, as it tends to do among many consultants and small business owners, into two camps: (1) pay me now; and (2) pay me in due course.

I’m in the second camp.

Large Clock in Modern Space

You need a payment philosophy.

It’s hard to run a small business (well, any business) if you’re cash-flow sensitive. Businesses have cash ebbs and flows, and the better you can manage the down times the easier it will be on your mental health. It can be easier said than done, but you need to be able to approach payments differently than you would “expect” a weekly paycheck.

For me, it’s a question of priorities. It’s a priority to get paid–but not a priority to track down immediate payment. That doesn’t mean you can pay me last; it just means that I’m sensitive to that fact that different companies have different payment cycles. And expecting everyone to pay me within 15 days, or even 30 days out, is not realistic for the larger organizations that I typically work with.

My goal as a consultant is to be part of the solution. It’s hard to be helpful if you’re constantly contacting your client because your payment is a day, a week, a few weeks “overdue.” You have to know when to ask–and how to ask. You have to know what they can and cannot realistically do to speed up the process.

You need trust.

I trust that my clients will pay me. I always have. For me, it’s part of my vetting process. If I don’t trust you, why would I work with you?

If I’m not sure, I seek payment in advance–whether it’s a retainer or a project fee.

Of course, there have been a handful of times that I’ve had to wrest payment from an organization. This requires creativity.

You need workarounds. 

There are three reasons companies take forever to pay: the float, the glitch, and “because we can.”

The float typically shows up when companies have a 45-, 60-, or 90-day payment policy. It’s a deliberate decision to hold your payment in their account until the last minute. To me, the float is a cost of doing business. You can choose to work with float companies or not. As Yoda says, “Do. Or Do Not.”

The glitch is common in large organizations where the accounting process is far removed from your client interactions. Payment is held up because someone didn’t check the right box or you were supposed to fill out a tax form that no one told you they needed. Or, as happened to me recently, payment had been approved but the person who was supposed to send out the form for some reason had not. So my client kept saying it had been approved (it had), but it wasn’t showing up. It’s a glitch. A lot of times you can solve a glitch by calling the accounting department and asking them to back-trace the invoice.

“Because we can” companies pay when they feel like it because they don’t think you have any leverage. They’re wrong. The key is to understand what your leverage is. Most of the time, what they fear isn’t being sued. It’s being exposed. My strategy has been to remind them politely either (a) that their clients have paid them (in the case of errant prime contractors); or (b) that they probably don’t want a reputation for stiffing contractors. Know their pain points, and yours will be resolved.

What’s your payment philosophy? How have you handled getting paid?

Feature image by futureshape; clock courtesy of Gratisography.

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