Tag: business development

  • Payment Strategies – Finding a Comfortable Time Frame For You And Customers

    Payment Strategies – Finding a Comfortable Time Frame For You And Customers

    One of the challenges all consultants face is setting up payment strategies for their customers. There is a need to keep revenue flowing while providing a reasonable amount of time for processing invoices. That is not as much a problem when there are multiple customers and they pay regularly. However, it can be crippling to a business when bill payments (or payroll) are delayed due to accounts receivable (AR) issues. A small company or individual consultant can struggle with this. Thus, it is worth our time to examine some options.

    Not One Size Fits All

    Note that the discussion is on strategies and not a single strategy. I have found this to be one of the first steps in meeting your needs and your customers’ needs. One way to slice up the approaches is based on your trust or experience with customers. This approach provides more grace in payments to your established customers while limiting risk for newer ones. Payments terms can be based on AR age or AR total. Both of these are easy enough to track for even a small company and can be set in contract requirements.

    I find that both approaches are helpful in small consulting companies. Some projects generate minimal revenue month over month. That can lead to small receivables sitting on the books for several months. At the other extreme, large revenue items can be critical to cash flow. When they are not received on time, the business can struggle. That latter situation is often a challenge for small consulting companies or individuals due to the feast or famine nature of this business.

    Payment Strategies Based on Trust

    Trust of customers and their payment processes is most effective when it is based on past experience. Therefore, it is best to start all new customers with a tighter set of rules and then loosen them after they have gone through multiple pay cycles. I recommend a minimum of three complete cycles. One or two is too easy to be an aberration or just them trying to keep new accounts current. Then, as you see consistent invoice and payment cycles, you can adjust your requirements to fit cash flow needs.

    Cash Flow Is King

    We all want to sign contracts and get those billable hours flowing. However, we need to see the payments for those hours flowing as well. When planning payment strategies, you need to be aware of your business’s monthly budget/payables and related payment terms. There is often a delay of 30 days or more from invoice to first payment, which can cause challenges if you do not have reliable cash reserves. Take note of your bank’s deposit hold terms as well. Receiving a payment is not the same as those funds being available. That may seem minor. However, we can see fewer and larger deposits for some customers that trigger the hold rules. I have often seen this pop up when a customer delays a few payments and then catches up in one big check.

    Splitting Invoices And Pre-Payments

    Many companies are hesitant to be aggressive with payment strategies when they start. Therefore, they set and accept customer-friendly terms but can lead to struggles as the business gets off the ground. Nevertheless, it is easier to reduce restrictions and policies than add them. Therefore, the best time to take a hard-line stance is when you start a customer relationship.

    Multiple invoices and early invoicing can help with this. Some companies invoice immediately on receiving a signed contract. That can cut down the time to payment by weeks or more. Likewise, it is more acceptable to pre-invoice some portion of the project or request a fee to start work. This strategy reduces risk and ensures you have some cash flow from the time the project begins. It may not solve all the problems, but it is an excellent first step.

  • The Mid-Year Review

    The Mid-Year Review

    A New Year always includes a flood of articles on planning and assessing for the year gone by and the one ahead. However, annual planning is not enough. That is why a mid-year review and adjustments are valuable. In particular, we need to adjust during the journey rather than wait until the end. They should also be much less investment than year-end as your course is set. It just might need some modification.

    Where Are We

    The middle of the year is a good point to see how you are doing. You should be about halfway through your goals or progress set in January. If you are ahead of schedule, then keep forging on. When you are off-track, then review options for getting back on track or even adjusting goals. Six months is a lot of time for a correction to “bake in” and turn a loss into a win. The modern business world moves fast. Your mid-year review may point to goals that need to change. A new product idea may appear to be a better direction to take, or the window of opportunity may have passed for a flagship goal of the year. Do not throw good resources after bad. If it is time to call it quits, then do so and move on.

    What Works, What Needs Change

    Another benefit of assessing progress at this point is that you should have a solid track record of success or challenges so far. Your adjustments made in January have now been in place long enough to evaluate them. The processes and tasks that have not paid off can be replaced with options that will hopefully serve you better. You might also be able to double down on the things that have worked well. Consider things like A-B testing and that you might know have a clear direction with either A or B. At this point, the evaluation period can end. There is no need to keep checking the score once a winner has been decided.

    Looking Ahead

    It never hurts to start to position yourself for the next race or objective. You can wait until November or December to start planning for the next year, or you can start today. There are often things you can do to help inform decisions to be made down the road. First, consider what sort of options you want to assess for the next year. Then keep an eye out for articles or other ways to get a jump start on assessing whether an option is worthwhile or if it is better to pass. When you put something on your mental radar and let it sit, you can often end up with a lot of material for that decision almost for free. You will find that you pay more attention to passing articles and discussions than you would otherwise.

    Adjust and Execute After A Mid-Year Review

    Once you have assessed where you are and where you want to be, it is time to make adjustments. These can be as little and simple as changing metrics or reporting up to scrapping a plan and going back to the drawing board. Do not be afraid to make big changes at this point. There is nothing to be gained by dragging out a losing cause. No one likes bad news. However, when you take the big step of re-assessing your goals and plans, you can properly set expectations for the remainder of the year. We all have seen situations where the goal line is adjusted multiple times in minor ways. These “corrections” can lead to frustration and wasted resources. A mid-year review is a perfect occasion to take a larger step and make a more significant course correction.

    The good news in all of this is that you have enough time to make these changes and still evaluate them at year-end. Our mid-year review and adjustments provide an opportunity to cut losses and start forward on a path to success six months sooner. However, that does require us to take a hard look at where we are and how we got here with an eye towards improvement. As with annual planning and review, look to change as a path to improvement rather than merely accepting failure.

  • Managing Upgrades and Software Versions

    Managing Upgrades and Software Versions

    Managing upgrades is something we all face. That. is true whether you are running your software in your house, at a small business, or for an enterprise. There are versions released regularly as often as quarterly, and sometimes we get the new version “free,” sometimes not. There are many things to consider when crafting a version roadmap for your software. Here are some things to help with that. These suggestions and warnings come from a broad experience with software and highlight some paths that can make your life easier.

    Managing Upgrades Through Major Versions

    The “old school” approach to managing upgrades was often made via major versions. Software companies would release a major version every year or so. Then you would take the time to get up to date. That approach quickly morphed into a leapfrog approach for many companies. The disruption of performing upgrades and costs of installs were enough that the benefits were often not worth the effort. There were also licensing constraints that made an “every other version” approach much more effective in time and cost.

    That approach is an excellent model for planning a version roadmap. There is always a cost to embracing/installing a new version. Often it works better for us to take on more changes less frequently rather than smaller changes more frequently. This approach also gives plenty of time for changes to “bake in” to the organization. Thus, allowing processes to evolve to embrace new features.

    Managing Upgrades Through Features

    Software used to promise needed features with every release. However, we have moved to a world where features are driven more by internal needs than marketing bullet points. Many organizations are content with staying on a version for years. These organizations prefer stability, and an upgrade tends to be large and feature-rich. That sometimes includes a push to move off of a version that is no longer supported.

    The risk with the above approach is running out of time before a release is unsupported. Likewise, the resources and upgrade paths can be limited. Less frequent upgrades can lead to much more complex paths and can put data at risk. Some applications go through “watershed” upgrades that require a significant data migration effort. Those typically require the users to be on a specific version before the migration is done rather than skipping through multiple versions.

    Obstacles and Road Signs

    The approaches listed are both valid, and either may be a perfect fit for your organization. We have already touched on some things to look out for. However, it is good to have a list to walk through in planning out your approach.

    • Be aware of watershed releases – When you have a release that will effectively be incompatible with prior versions, that can often be a “need to upgrade” marker.
    • Store Version media or packages – There are combinations of software required for a version that can become difficult to replace. Vendors move forward or may even cease to exist. Thus, it can be critical to access prior versions of software and even operating system tools when you delay your upgrades.
    • Know Your Features – I have found that it is rarely a good idea to take an upgrade just because it is available. While there is risk involved, there is also the factor of utilization. It is important to know what your software can do, and blindly upgrading can miss out on valuable features. Invest the time for reviewing release notes and training updates when available. This investment can pay for itself quickly and inform you of whether future upgrades are valuable or not for your needs.

    The Cloud Factor

    Software as a service and the Cloud can make these types of issues seem a thing of the past. However, even SAAS products have versions and upgrades. You might be in a situation where you can hold off on a version upgrade for a while, but that is rare. Even in those cases where you have a “choice,” it often is presented as a preview you can embrace sooner rather than later. While you lack choice, there are still actions you can take (and should) as part of your upgrade strategy.

    • Take advantage of backup options where possible.
    • Use and verify export options where possible. It is your data, make sure you have access to it outside of the SAAS product.
    • Keep current on planned upgrades, enhancements, and outages.
    • Plan for some time to test and verify updates.
    • Embrace the latest features as suitable to your needs.
    • Avoid company critical periods of work that coincide with a maintenance period or upgrade.

    The good and bad part of a SAAS product is that you are not responsible for the workings of that product. A lot of the management and administration tasks are taken out of your hands. Nevertheless, the steps above can help you mitigate risk at the cost of taking some of that management back on yourself. It is worth that trade-off. You will be happy to have a way to take your data elsewhere when a product becomes unusable, or a provider closes shop.