Dear Colleagues
We have created a few more short videos (in 5 min segments) and associated book chapters on PLC installation and Programming.
It is clear that we are not in a boom time at present. Many of the more entrepreneurial engineers amongst us have either been moved out or move out and set up as independent consultants. Or you may head up a division of a company where one of your many responsibilities is ensuring good cash flow. Or you are selling your much-in-demand skills after hours - moonlighting. You may think that working for large companies means you don’t have to worry about the issue of money. But sooner or later, “being paid” will confront you. In these circumstances, you will be exposed to the inevitable rogue clients who will use your good nature as an engineer or technician to take advantage of you. And as my old business lecturer used to tell us: “Remember – Cash is King”. Massive company profits, but no cash is far worse than company losses, but cash in the bank.
Essentially, your priorities are few in consultancy: Get business/do the work and get paid. Most books about consulting ignore the “getting paid” bit - as it is the most unpleasant part, the part we as engineers tend to avoid talking about. We have an inherent belief that our client is the ultimate “good guy or gal”. Getting the business is great, but getting paid is crucial. And let’s face it: most of us only charge moderately (and often discount massively) for our services; as we tend to focus on the technical aspects (“Do I like doing this work” is the key decider often for engineering professionals?). Incorrectly, I might add. But as engineering professionals we generally aren’t greedy. We are the archetypal good guys and gals focusing on a good quality design and project outcome; but not on payment issues. And this is where the problems start…..when you have a problem client. Read on….
Spot the problem child/client
A few suggestions on clients who may be problematic in terms of paying you for your honest work. Attempts at avoiding payment are likely from:
* Small or medium sized companies controlled by an owner who has a big stake in the profits
* A large company with the executive tied to the profitability of your project you have been working on
* A company which has cash flow problems (often due to poor management)
* An entrepreneurial company which lurches between largesse and large losses
* High risk projects where the business results are uncertain – but the client wants to hold you responsible for his decisions (and cash flow)
When payment is due; don’t dilly dally
We are always embarrassed as engineers and technicians when a client is late with payment. Should we call him/her? The answer is yes. Immediately. If you delay; you could end up in a far worse situation and set a precedent for slow future payments. Don’t let the amount owing to you build up to significant amounts. You may find it impossible to recover from this situation as you will now have joined the bank in financing the client’s day-to-day activities (his working capital), where he uses you. And if the no payment situation persists for a few weeks; deal with the situation head on. Perhaps (dare I say) get the debt collector onto the client as soon as possible and write off this fee (and client).
The check (or cheque) is in the mail
Watch out for the situation when the client chases you up at the end of the project to finish as soon as possible, but you haven’t been paid yet.
The client will assure you that you will be paid soon; the check is in the mail; they have lost your invoice – please resubmit; the manager who normally signs is ill or out of town. Don’t hesitate. Confront the client immediately and if nothing satisfactory is forthcoming - stop work immediately and remove all valuable supporting equipment / materials / software from site. Show the client that you are serious as you are in a difficult situation.
Watch out for exotic and faraway places
Your risk of not getting paid jumps significantly when doing work at remote locations. No matter how much money you are going to get paid; it is important to weigh up the risk. The client knows this and may decide to play games with payment if you are thousand of kms away. It is best to avoid doing this work unless you have payment guaranteed. Furthermore, the remote location may have a questionable legal system (if you are forced to protect your rights), let alone morals and ethics which may not align with your own.
Don’t give away the house for free
Sometimes you are tempted to do the preliminary work for free. So that you can get the job. Be very wary of this approach. It shows a distinct lack of respect for you as an engineering professional.. And often your design gets given to someone else to use as a starting point (for free) or you get treated poorly later on in the project.
Don’t persist with poor clients
As with personal relationships, if your partner (the client) treats you with disdain as far as payments are concerned or haggles about rates; don’t continue the relationship. Things never get better – they tend to worsen. Move onto others who respect you and want your skills. Your time is too valuable to waste on these issues and indeed life is too short to “drink bad wine”.
Variations are critical to deal with now
Many years ago I worked for a bunch of consultants who were always keen never to rock the boat with a tough mining client. Whenever a variation came along for the work he wanted done; they insisted I didn’t pester the client for a variation order (because he used to shout and scream and throw things around the office). Two years later, at the end of the job; when we confronted the client with the string of variations, he was horrified with the significant dollar value and only paid part of the total bill. The (competing) consultancy company, who worked with us on parts of the project, used to confront the client with the variations immediately and secured his signed assent. At the end of the project, they received the full amount for their work. We didn’t. They were hired by the client again for the next project as he respected their frankness and knew where he stood financially all the time. We weren’t.
So - if your client wants to make any changes to the project’s scope; make sure he signs off on the change the minute it occurs and knows exactly how much it will cost him.
It is your professional duty to protect yourself
When commencing any project, it is perfectly reasonable to insist on advance payment to cover your costs before you get paid. No worthy client will have a problem with this request. If a client does play games here; be very suspicious.
And remember; when you are wondering if you will get paid or not, Robert De Niro’s favourite dictum comes into play: “When there is any doubt, there is no doubt”.
Thanks to the IEEE and Nathan O. Sokal for the inspiration to write this article.
Yours in engineering learning
Steve
