Pirok Financial Group, Limited: Recent Comments

Comment on Should you require up-front deposits from clients?

Ken Pirok — Tue, 04 Nov 2008 16:10:23 GMT

Doug,

Thanks for your comments. They provide a new perspective, and the use of a contract is certainly a variable that may render up-front payments less important.

I'll just reiterate that every situation is different. The fact that I have worked with some very new or small or troubled or challenged businesses is probably related to the fact that I have been stiffed before. And, that's also why I sometimes require payments in advance.

When I was very new and small myself, the advance payments were useful, because I didn't have a contract. I still rarely use contracts, unless the size or scope of the engagement demands it. If I were to have a contract with clear objectives, deliverables, and payments, then I probably wouldn't also need money in advance.

Comment on Should you require up-front deposits from clients?

Doug Schaffer — Tue, 04 Nov 2008 01:42:05 GMT

Like anything in life, one should never say "never". But my general rule of thumb is never to ask for a downpayment in advance for a consulting engagement. Consulting is one of the few professions left in which business is based on relationships and a handshake or verbal agreement are expected to be enough to start work. This certainly doesn't mean you don't have a signed contract, with agreed upon payment requirements, before you commit significant resources to the project. It does mean, if you want the work, you have to honor the fact that your client will always have waited too long to hire you and everything you are involved with will be treated like a crisis. If you take the risk of trusting your client up front and are willing to get to work on his/her project ASAP, you will probably have a client for life (assuming you do good work). If you focusing on the contracting details at the beginning of the relationship, you will have a client who treats you like an attorney - a necessary evil who must be kept at arm's length and used only when absolutely necessary.

I have never been stiffed by a client in the 16 years I have been working as a consultant (although a few have been slow to pay). I have been stiffed once on a consulting contract, but I was by a consulting firm I was subcontracting with (yes your fellow consultants should be hogtied with contracts and payment agreements, before you work with them - just kidding). I do believe that upfront payments are appropriate if there are significant startup costs such as international travel or expensive domestic travel, payroll expectations which you have to meet regardless of if or when the client pays, and / or if the client is obviously in financial trouble and that's why you are being asked to help.

Otherwise, consulting is a relationship business built on trust. After all, the client is often trusting you to tell them what to do to improve the way they run their business. There is no greater risk or act of humility than to ask for help in raising your own child and similtaneously putting your professional reputation in someone else's hands. If you were in that position, who would you hire - the person who listened to your problem, made a comitment to help you fix it, and shook your hand on it or, the person who insisted on getting your problem, their commitment, and the required deliverables down in writing, along with a down payment, before any work began?

That's just one of the things that make consulting so entertaining.

Doug Schaffer
Managing Director
The Best Consultants. LLC

Comment on Should you require up-front deposits from clients?

Ken Pirok — Sat, 18 Oct 2008 05:00:21 GMT

Looking back, I have often required partial payment in advance for consulting jobs. I usually require roughly a third or a half up front when I write a business plan. I do this because I am about to make a substantial investment of time (and occasionally money). I also do this because the clients are usually individuals, who have not yet even started their business.

On the other hand, I don't usually ask for anything up front for accounting services or work that will be performed on a regular basis. And, if I've worked with you once, then I certainly won't ask for anything up front again.

Comment on New!

Ken Pirok — Fri, 20 Jun 2008 18:12:56 GMT

You may also check out my blog: www.factorfictionblog.com.

It is meant to be fun, but it does contain some business, tax, and political articles too.

Comment on Year-End Accounting

Bernard — Tue, 11 Sep 2007 07:40:41 GMT

Good blog! intresting work.

Comment on Getting Yourself and Your Business Listed and "LInked In"

Dan Ault — Fri, 03 Aug 2007 18:56:50 GMT

Very Good Information... Thanks

Comment on Getting Yourself and Your Business Listed and "LInked In"

Annette — Thu, 02 Aug 2007 19:28:14 GMT

Good ideas. We often forget that networking is crucial for success in our businesses. This is a good reminder.

Comment on Business Planning: Predicting Your Sales

Ken Pirok — Sun, 07 Jan 2007 05:51:51 GMT

I just read about a business that kept a log of every customer they had to turn down. They created a spreadsheet detailing when and why they couldn't provide their services. When it came time to get an expansion loan, they brought their spreadsheet to the bank as evidence that they could generate new business. Apparently, their loan was approved.

Comment on Year-End Accounting

Ken Pirok — Mon, 11 Dec 2006 19:07:33 GMT

I went shopping for blank W-2 forms the other day. Staples was selling a package of 50 forms for around $35. Maybe this is because they include software that you don't need if you use your own accounting software.

Office Depot had packages of 50 forms for $20.99.