How do self employed consultants get paid?

[Packaged Solutions]

By that I mean, how do they collect their pay after completing the work?

Lets say for example a consultant does 2 hours work for a customer. The consultant tells them all they need to know, then the customer says "cheers mate!, see ya".

How do you get them to pay up?

Do you charge in advance?

Thanks

Chris

 

[RedEvo]

You invoice them. You could register as self employed or as Ltd company.

Once you invoice them you wait to get paid, then chase for payment then threaten legal action then finally get paid, that's usually how it works

d

 

[Billmccallum]

I would normally charge for expenses (travel, hotels, etc) on weekly basis in advance and invoice for the agreed total at the end of the project.

As RedEvo say's, it can be hard to get people to pay up at the end of a contract, but if you have developed a professional working relationship with someone, they usually do pay on time.

I have found it much harder to get paid when decisions are made by committee rather than by a single person.

 

[Astaroth]

Depending on the duration of the contract its either monthly or end of contract invoicing.

The line between consultants and contractors can blur but certainly some "consultants" that typically work on more long term placements will sometimes use umbrella companies which handle the invoicing on your behalf.

 

[Packaged Solutions]

The sort of consultancy work I am considering would only be small amounts and one offs. I doubt I'd ever get the same customer twice. Average invoice about £30-£60. They are also probably the sort of people that would avoid paying

 

[Drpepper]

The sort of consultancy work I am considering would only be small amounts and one offs. I doubt I'd ever get the same customer twice. Average invoice about £30-£60. They are also probably the sort of people that would avoid paying

This probably suggest your whole business model is somewhat flawed and the "work" are you doing isn't providing any value.

Again, another thread where advice is required without saying exactly what it is they do.

 

[Packaged Solutions]

I'll make a thread soon about my business idea to see what the general thinking is. But for now, lets assume the business model works.
I was thinking about charging £30 for the first 1 hours work, up front to look the clients need. I could tell them what I could do for them, what work it would require then give them an exact figure of how much any further work would cost.
I might even be able to solve there problem in that first hour, or at least provide some answers. Sound reasonable?

 

[Packaged Solutions]

That sounds like I'm charging for a quote lol, not quite what I meant.

 

[Curious]

You invoice them. You could register as self employed or as Ltd company.

Once you invoice them you wait to get paid, then chase for payment then threaten legal action then finally get paid, that's usually how it works

d

Disturbingly accurate series of events there..

 

[Stephen Berry]

I might even be able to solve there problem in that first hour, or at least provide some answers.

That sentence has all the alarm bells ringing for me (and it's not just the grammatical error).

If someone is asking you to complete some consultancy because they have a known 'problem' (your word!) and it can be 'solved' in a 1 hour session, then I suggest an hour's chat with a suitably qualified and experienced coach would yield greater benefit (cost £500-£1200 depending on the coach) - it is 'self-solveable', they just need the facilitated route.

If it is genuine consultancy, you would measure it in days and again, a suitable consultant with appropraite qualifications and experience would be in the region of £2,000 - £4000 per day.
If they do not have the appropriate qualifications, experience and track record, I'm not sure they would add any value - even the £30 you mention.
So .... I would advise that you progress with extreme caution and open yourself to critical challenge. From the very limited information on view, I'm not sure payment would be an issue: getting the job would.

You could always do 'pay by results' on an agreed scale. We've offered this many times - pay nothing if the intervention achieves nothing and a sliding scale for success. No-one has ever taken us up on it as a small percentage for achievement can become a huge charge - most want to play safe and spend a few thousand.
However - maybe worth considering?

 

[Packaged Solutions]

No need for alarm bells Stephen. Let's take a step back. I havnt told you what I would be consulting on, so how can you say the going rate is £2k-£4k per day? or that a coach at £500-£1200 would achieve better results :|

Say for example I was helping people 'solve' their 'problem' (is there something wrong with these words?) of not being able to make a decent cup of tea. Do you really think they will be willing to pay £2000 for a hour (day?) of my time?

I honestly dont think getting work will be a problem, getting people to pay up afterwards could be a hassle.

 

[Tom McClelland]

It is worth a lot of money to not have to chase for payment.

A Paypal Pro account costs £20/month, and allows you to process credit cards by internet. So you agree before the meeting that they'll be paying when the meeting is over, and before leaving you process the credit card then and there (on the netbook/ipad or whatever you've brought along with you for that purpose) for the agreed amount.

This costs you c.£20/month + about 3% of your gross, but you don't have to chase for payment any more.

 

As a consultant I would agree with a client beforehand what my rate was, what the task was, and how many hours I expected it would reasonably take. Usually got the job done on time, however if it ran over I'd always ask the client if they were happy extending the initially agree timeframe.

After completing the job, I'd e-mail the client an invoice giving payment terms of 28 days and different payment options. Only clients I ever had a problem with getting paid from were newspapers, bloody nightmare. Once even had to go to small claims court.

One client I had insisted on all communication being confirmed/summarised in e-mail because that way there would be a "paper trail" in case of any misunderstandings or disagreements. I found this rather irritating at first, but very useful in the long term and have since continued this tact. People might say, "I don't remember agreeing to that" and you can just forward them their own e-mail which always sorts problems out.

 

[Stephen Berry]

No need for alarm bells Stephen. Let's take a step back. I havnt told you what I would be consulting on, .

Fair comment and good luck - you are right, I have jumped to the conclusion that you were considering business consulting, where these are the rates we and our competitors charge.

If you are consulting in other areas the market will, of course, be different - as will the charging structure.

 

[Billmccallum]

I'll make a thread soon about my business idea to see what the general thinking is. But for now, lets assume the business model works.
I was thinking about charging £30 for the first 1 hours work, up front to look the clients need. I could tell them what I could do for them, what work it would require then give them an exact figure of how much any further work would cost.
I might even be able to solve there problem in that first hour, or at least provide some answers. Sound reasonable?

It would be interesting to see your business model, but I suspect that it won't be "Consultancy".

To undertake true consultancy, you need an analysis of the clients business, which takes a great deal more than 1 hour, to be able to put together a range of options that the client can choose from.

Expecting to "know" what a business needs after an hour of conversation is not consultancy.

 

[justintime]

Sounds like home or office computer repair to me - am I close?

 

[Esk247]

£2,000 a day? those people should just head over here...free advice and a bit of fisticuffs over the colour of their website.

But in answer to the OP yes, you invoice depending on how you're going to price your services. You may be location specific, advertising in a set area so you don't have to travel far or you may be a consultant in a specific field.

You could set up a Ltd Consultancy firm, glossy business cards and a boring looking website that talks all about Effective Strategy Implementation and Direct Sales Strategy Analysis and Development traini....yawn..training.

 

[mikerr]

A Paypal Pro account costs £20/month, and allows you to process credit cards by internet. So you agree before the meeting that they'll be paying when the meeting is over, and before leaving you process the credit card then and there (on the netbook/ipad or whatever you've brought along with you for that purpose) for the agreed amount.

This costs you c.£20/month + about 3% of your gross, but you don't have to chase for payment any more.

Yep - this is what I have - its basically a credit card payment terminal on your laptop, and can also be used for payments over the phone.

Even better than that, unlike traditional credit card processors who hold funds for days or weeks, funds are available to use instantly in your paypal account - handy to buy stock etc from anywhere that takes paypal.

Note: paypal is not mentioned on their statement, just your companyname.

 

[Packaged Solutions]

Some interesting and helpful replies, so thank you. I'd like to clarify that I am not a business consultant, or a PC repair consultant
You'll never be able to guess what I'm planning but nice try anyway
99% of my work would be done from home, I'm unlikely to meet my clients.

 

[IndiCafe]

It sounds like the initial conversation would be some sort of diagnosis/health check, followed by a list of possible services you could provide to help address issues - and the customer would then be able to cherry pick which services they wanted.
In that situation I would suggest making the initial discussion no more than 1 hour, and free, as many solicitors do. The real money is in the subsequent work, as if you do just one of the services well, they may come back for more later.
With low values like you're mentioning I would not offer credit. Provide an invoice and get payment immediately - particularly as your customers are high risk.