General Consultant Discussion

A little background here: when we went to fixed / value pricing, we also implemented credit cards as a payment solution to make things more convenient for clients and faster for us to collect. We require payment up front on all projects less than $5,000 so this was especially beneficial for clients / prospects that selected the fast-turn around option. They sign the proposal and we send an invoice and a credit card authorization form. Works great. So ... here's where this is leading: as of today, we have switched over to the Sage Payment Solutions for our credit card processing. We found the fees were much lower than what we were paying and, as a Sage partner, we received some sort of account credit for the first 10 months. If anyone here is taking credit cards, you might want to look into yourself. They are growing their business and will probably give you a sweetheart deal and it will better inform you so you can recommend it to clients as one more tool in your toolbelt.

I did somewhat similar though I found that I could generally get most of my customers to pay me up front by check so I wound up dropping Sage Payments. There is also an additional monthly fees with SPS as I recall for American Express and SPS will try to get you to sign on for a fixed term with a fee that you must pay to break the contract. They pulled that out of my account (I think it was $250) until I called and made a stink and they rebated it. I'm not a big fan of credit card payments only because I'm not sure I need to eat that fee though, yeah, I could just build it into the proposal. I am also slightly wary about the possibility of chargebacks - though if you are offering 30 day money back that's somewhat the same deal.

Check into the chargeback issue closely. The bottom line there is that someone who effectively has nothing to do with your company and who may in fact be a lot more concerned about keeping the person who gave you the card happy than they are with doing what is fair to you is deciding which are legitimate customer complaints and which are not and the time they have to make those decisions is often a lot more than 30 days. I do not and never have taken credit cards for exactly this reason.

Good feedback guys. We've been taking credit cards for almost three years now and haven't had a problem. Most of the projects involved are under $5K so the risk is somewhat minimized. I guess I might get burned one of these days but my track record has been fairly positive to date.

Peter, just be careful. I have only even been threatened by lawsuit by one single individual or company in the past 25 years. The kicker is that per person who did the threatening was a deacon in a Baptist church that seemed like a real good guy when I first met him. Turns out as well that he had threatened most of his vendor's with lawsuits at one point or another and that was just the way he did business. He decided that actually following through on the threat was not in his best interests, but I still incurred a legal bill just to respond to his threat. The Bottom line is that you just never know when a client is going to turn into or be acquired by a jerk and that jerk can complain to a credit card company without having any legitimate reason to do so at all and then you have to spend the time and money to deal with some credit card company as a result.

@PeterWolf Can you elaborate on the account credit? Is this the $1500 promotion Sage is offering?

Not to put words in the Peter's mouth, but it sure sounds like it....

@MarkKotyla - I think that's it. I didn't handle it - someone else in my company did. @GregTalburt - Being sued by an a$$hole has nothing to do with credit card processing unfortunately. I had a similar situation early on at Azamba where a client was all lovey-dovey but then decided he didn't want to pay us or the CPA firm that brought us in. He threatened lawsuits against all of us. I backed out gracefully and handed off to a new partner, wrote off the outstanding amount of $10K. The CPA firm stood their ground, the guy sued them, complained to the better business bureau and cost them state contract business. In the end, he got what he wanted and probably sleeps comfortably at night not even considering that there is another way of doing business. Which is, in part, why I believe in value billing. As business owners, we are at risk of uncovering one of these bombs all the time. The value billing, careful scoping and clear agreement on deliverables is a document that can be used to clearly frame projects and relationships.

Existing customers don't scare me as much as customers from the Internet. I find those non-local customers are almost always sandbagging some hidden issue. They are high risk and have to be managed with more attention than your typical local customer.

That's why I use a ""starts at ... "" fee schedule to help qualify them. Oh wait... that's not me - that's you. But I have been meaning to tell you that I was thinking about it earlier this week and have concluded that it's a brilliant approach. I am assembling my own to help partners that come to me know what a ""typical"" SageCRM implementation runs or upgrade or training runs so they can advise their clients better.

If you steal my idea I will kick you in the teeth the next time I see you.

Good luck with that. I've been running a lot lately - you won't be able to catch me.

Peter, I was talkiing about the credit card issuer-not the credit card processing company. From my perspective, the issue is exactly the same with credit cards as it is with jerks that threaten to sue. You are dealing with someone who does not want to pay for something that you provided to him. The only difference is that it at least costs the jerk something to sue, chances are good that you will already have his money if you sold him something like MAS 90 software and the court's decision will be based on a known-in-advance set of rules (the law) and will be made by someone that has a more or less unbiased position if it comes to that. It costs the guy who bought the goods absolutely nothing to contest the charge from you with his credit card company (who will very likely not pay you for the goods until the complaint is resolved as a result) and the credit card company may follow its' own set of rules and may very well not be unbiased if the purchaser of the goods puts more money in their pockets than you do. I thankfully have no experience with having to deal with the risks associate with credit cards, but I have heard plenty from my clients who do accept credit cards and the bottom line is that they write off a lot more related to customes who use credit cards than they do related to those who do not-a whole lot more.

Thanks Greg - I will pass this along to the right person here.

@peter, I am not on any way trying to tell you how to run you business. I just want to make that clear. Yor company is doing quite well from what I understand and would not be doing so if you guys did not know what you are doing. I am just sharing what i have heard from some of my clients and they have very much of a love/hate relationship with the credit card companies. I have never had any problem getting clients to pay me in advance for things that I pay for and my total bad debt on services that I bill for after the fact is less than $1000 total over the past 25 years on billings of several million and so I am lucky not to need to take credit cards.

@GregTalburt - It's all good. Better than good, in fact. I sincerely appreciate you speaking up. That's how these groups work - everyone shares their perspectives so we can all formulate what works best for each of us. My opinion is that we all have blind spots so it's great to get advice from others in similar situations to fill in those gaps.

God knows I still have a lot to learn. The older I get, the dumber I realize I am.

Even if you do bill hours, this is why its critical to sell prepaid blocks (and gives you a reason to discount your rate if its necessary anyway). The key is never letting the hours get used up and getting into 'debt' again because in the end, he who has the cash wins with the $ amounts we are talking.