The Independent Computer Consultant
How to Get Paid On-Time, Every Time
By Robert Peretson SuccessfulComputerConsulting.com
Build your Computer Consulting business on a proven model, and you will succeed!
One of the biggest challenges faced by an Independent Computer Consultant when starting a small business of his or her own would be receiving payment on time for services rendered. In the small business market, it is usually expected that charges are invoiced on a monthly basis for all services provided during the previous month. Now you may be a very responsible computer consultant, and consistently mail all of your invoices out on the first of the month. But that doesn’t mean your clients will be putting a check in the mail to you on the 2nd. As a small business owner yourself, you're going to have financial responsibilities of your own that you'll be required to meet on a regular basis. Regardless of how hard you work to make sure that your receivables are sufficient for meeting your expenses, it won't do you any good if your invoice for that hard work winds up sitting in your client's "to do" box, for weeks or even months. Fortunately, there's a very simple solution for making sure that you receive payment for your services ON THE VERY SAME DAY YOU GENERATE YOUR INVOICE. A Factoring Company can purchase your receivables from you. Once a month, or more frequently if you wish, you can email or fax a copy of each of your invoices directly to your factoring company. On the same day, the factoring company will deposit up to 85% or more of the total amount of your invoices directly into your bank account. Then, once your client delivers payment to your factoring company, you will receive the remaining 15% of your invoice, minus the fee charged by the factoring company. The fees will vary depending on when payment was received. Fees can range from between 1.2% for payments received within 30 days to 1.6% for invoices left outstanding for longer than 90 days.
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The Independent Computer Consultant Community
I believe these fees are well justified, just so I could know at the start of each month, EXACTLY how much money I'll be receiving and EXACTLY on what date! It's also great not having to deal with making collection calls. If a client is slow in paying an invoice, the factoring company acts on your behalf as your outsourced "receivables department". They will make the initial collection attempts, and they will typically do it in a very professional and effective manner. If an invoice ultimately goes unpaid, it becomes the responsibility of the computer consultant to repurchase the invoice from the factoring company and find a resolution with the client independently. Another great benefit of factoring receivables is the ability to generate additional income outside of the regular, monthly billing cycle. For my small business clients, my primary service is a Proactive Maintenance Plan, for which I charge a flat, monthly fee. For this fee, I provide round-the-clock network monitoring and remote computer support. These receivables are generally invoiced for and collected on or around the first of each month. But very often, I'll make recommendations for new projects that won’t fall under the scope of the regular, monthly maintenance plan.
For example, installing a new firewall. This project would be billed in addition to the regular, flat monthly fee. If installation of the firewall is completed to the client's satisfaction on the 15th of the month, an invoice for the project can be created on the 15th, submitted to the factoring company, and be funded to my bank account all on the same day. Having consistent and reliable cash-flow is critical to the survival and growth of any business. Especially to a start-up computer consultant without substantial capital sitting in the bank. Factoring receivables can provide the financial stability necessary when starting a small business as an Independent Computer Consultant.
Robert Peretson is the founder of Perry Consulting, a New York based computer consulting firm, started in 1996. Today, Perry Consulting enjoys a reputation as the premier provider of computer consulting services to many of New York City's most progressive and prestigious small businesses. In 2009, Robert founded the website SuccessfulComputerConsulting.com, a training and support portal for IT professionals who are interested in starting a computer consulting business as an Independent Computer Consultant.
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