Managing Consulting Finances

Clients not paying invoices in time is the number 1 agency killer in India. But nobody’s talking about it - we’ve accepted it as normal. In my first year, we had high paying clients - yet I’d have to pay expenses out of my savings sometimes. Last month, I saw an agency shut down because they couldn’t pay salaries and rent, with ₹20+ lakhs in unpaid invoices We never think it’s okay for employees to get their salaries late. So why is it okay for clients to not pay on time? As service providers, we need to speak up - and change our payment terms - to prevent this financial abuse. Here's what I do at my 8-fig agency to prevent these problems: 1. Make upfront payments a rule Charge 100% upfront for retainer clients. Bill at the beginning of the month, not end. 2. Split large projects into payment milestones Start (50%), Midway (30%), and Delivery (20%). No milestone paid? No next step. 3. Stop hourly billing Prioritise monthly retainer or project fees. Charge based on value provided, not time. 4. Build a ‘Cash Cushion’ fund 10% of revenue goes to a rainy day fund. 5. Automate follow-ups & invoicing Using Stripe, Razorpay, Refrens or a VA. Don’t let clients forget, keep nudging. - Also, pro tip - Build a personal brand. In a worst case scenario, you can expose a bad client on social media and get community support. Client should not avail our services unless they can pay for them. So let’s work together to stop this injustice. Feel free to repost if you resonate with this message. #clients #agency #business

What’s your call here? This came up in the business community I run, Scalepath. (Shoot me a DM if you’d like to apply) WHAT TO DO WHEN SOMEONE DOESN’T PAY YOU (None of this is legal advice! Get a lawyer!) — Step Zero: If you think a customer is at risk of non-payment, there are ways to avoid the headache: You could build an ironclad contract with them. You could get them to pay upfront. Or you could not take them as a customer. — But let’s say you’re in this position already: 1. Assess the situation Make sure you understand what’s going on. Could this be an innocent mistake? Because then the resolution is easy. It’s just, “Hey, you’re late. Can you pay us?” — 2. Confirm your invoice details and accuracy Sometimes, invoices don’t get paid because they’re not agreed on. They won't pay if someone doesn’t agree with a bill. Clear contracts are critical. — 3. Set up auto-reminders and late fees A standard late fee process can work wonders. At one business, we added a 5% late fee, and our invoices were all paid on time. You can also shorten your timelines. Can you switch net 30 to due on delivery? — 4. Formal notice Now, they’ve missed their payment and aren’t responding to follow-ups. It’s time for a letter or email stating the demand for payment. Make it courteous but firm. You’re building a paper trail. At this point, they may call you up and say, “I can’t pay the whole bill right now.” Smaller payments over time can be a win-win. You can get at least partial money returned without paying your lawyers. Ensure you agree on a firm date for when they’ll pay you. And the consequences if they don’t: lawyers, collection agencies, etc. If you’re a service biz, don’t dig your hole any deeper: Suspend their service. — 5. Final demand letter This is a good time to get your lawyer involved. People pay more attention to a letter from a lawyer. At this point, start considering whether this debt is worth pursuing. Your time and resources might be better spent finding non-crappy customers. — 6. Talk to your attorney about legal action At this point, it starts getting expensive. Going to small claims court, that kind of thing… Sometimes, you get lucky. Other times, as my grandpappy would say, “You can’t squeeze blood from a turnip.” Remember: this is a business decision, not a personal one. Weigh your options carefully before chasing a deadbeat down a rabbit hole. — 7. Explore your alternatives Are the people still talking to you? Do they have money? Consider mediation — especially if there’s a disagreement about the amount, the terms, any of that. What about a collection agency? Discuss these with your lawyer. — 8. Go to court / Sue them If you and your lawyer decide it’s a good business decision to sue, I wish you luck. I try never to go to court. Life’s too short to spend in litigation. — 9. Review How did you get here? Find the lesson and make your business stronger.

Scaling sounds great.  More clients, more revenue, maybe even a team. But if your finances are messy, growth won’t fix your problems.  It’ll multiply them. Here are a few red flags to check before you try to scale: 1. Cash flow is chaos If you’re constantly chasing invoices or stressed about bills, you don’t need more sales, you need better cash management. 2. You don’t know your key numbers What’s your profit margin? Break-even point? Monthly overheads? If you can’t answer quickly, scaling is risky. 3. Your prices are too low If your margins are thin now, growth just means doing more for less. Fix your pricing first. 4. You're approaching the VAT threshold with no plan Hit £90k+ turnover and you may need to add 20% to your prices overnight. Plan ahead. 5. You treat your business like a personal bank account Random transfers, personal spending on the business card, this is a recipe for tax trouble. 6. One client pays most of your bills If 60%+ of your revenue comes from one client, you don’t have a business, you have a risky job. 7. You’re already drowning in work If you’re burnt out now, more clients won’t help. You need better systems, not just more sales. The fix: ✅ Get your cash flow in order ✅ Review your pricing ✅ Plan for VAT ✅ Learn your numbers ✅ Separate business and personal finances Growth is good, but only if your business is ready for it. - Which of these red flags have you faced?

Why chasing sales could be stunting your growth. Are you focusing on the right numbers? If you're focused on chasing revenue, it won't be telling you the whole story, it's time to dig deeper and understand your client profitability. Why is this crucial? ⏬ 1️⃣ Profitability vs. Revenue: It’s possible for sales to increase while profits stagnate. Understanding why this happens is critical. 2️⃣ Cost Analysis: Don't just look at overall costs; understand your costs per client. How much time is spent by staff on each client? 3️⃣ Data-Driven Decisions: With client profitability data, you can identify clients that truly deliver the best financial outcomes, and make informed decisions about where to invest your time and resources. 4️⃣ Revealing Insights: You might find that a client bringing in a large amount of revenue has a very low-profit margin, while another, with lower revenue, has high margins. This information is key for strategic planning. How to get started? ⏬ 1️⃣ Analyse Costs: Gather data on all costs, including staff time, materials, and expenses. 2️⃣ Categorise Clients: Use graphs or matrices to categorise clients based on performance. 3️⃣ Refine Strategy: Use this analysis to nurture key clients, adjust pricing, and make better sales and marketing decisions. 4️⃣ Understanding client profitability lets you move away from simply chasing sales numbers to strategically targeting the most profitable growth. Read our full article (4 min read) (link in comments) to discover - How to calculate client profitability How to categorise and analyse your client base. How to use this analysis to refine your sales, marketing, and pricing strategies. #ClientProfitability #BusinessGrowth #StrategicPlanning #SME #PortfolioFinanceDirector #VirtualCFO #FractionalCFO #SMEFinance #SmallBusinessFinance

I’ve started this week with overdue payments from two clients. At first glance, collections may sound like a finance team problem, but in reality, they have everything to do with growth. Why? Because cash flow discipline determines whether your business runs sustainably or stumbles despite great work. In India, delayed payments often have less to do with project scope or billing schedules and more to do with how clients prioritize their cash flow over yours. The question is: how do you safeguard your business without alienating relationships? A few lessons I’ve learnt the hard way: 1. Set expectations twice, not once Over a decade ago, a colleague and I went to collect a pending payment under ₹5 lakh. The client refused, claiming the service didn’t meet expectations. The real issue? The engagement letter had been signed by a Partner, who was absent until the deliverable was presented. The client assumed the Partner would be involved throughout. We eventually collected payment after three painful months. Lesson: confirm expectations when signing and again at project kickoff—don’t leave room for assumptions. 2. Contracts must be watertight—and reinforced Clients who overlook payment terms and insist you start projects “on goodwill” are often the ones who later argue over technicalities. Only strong contracts—and periodic reinforcement of those terms—work. Monthly billing can also de-risk project-based engagements. 3. Always know the escalation path In government and large enterprise contracts, relying on one single point of contact (SPOC) is risky. I’ve seen payments delayed by a year simply because the SPOC was evasive, and we didn’t know who else to approach. Mapping the escalation matrix upfront helps avoid these bottlenecks. And if, despite all this, a client still doesn’t pay? Then it’s not a client, it’s a liability. Pick clients who pay—even if the work is less glamorous. If you want “interesting work” at all costs, be ready for the possibility that it might also be unpaid work. Here’s the bigger truth: collections are also a strategy. The clients you choose, the terms you enforce, and the discipline you bring to cash flow management directly shape whether you grow sustainably or stumble despite great work. #BusinessGrowth #CashFlowManagement #ClientManagement #LeadershipInsights #GrowthIsDiscipline #CashFlowTruths

Far too many Consulting firms struggle to scale beyond the influence of their Founder. They fail to build recurring revenue channels that extend beyond the Founder’s personal network and reputation. Instead of intentional growth, they operate on ad hoc improvisation—saying yes to everything, reacting to the flow of the day, and never truly designing a scalable model. The result is scattered efforts, unpredictable revenue, and a ceiling that’s impossible to break. Many Founders hesitate to hire senior experts due to their high cost, despite these individuals being best positioned to drive business growth. Even when they do bring them on board, they are often reluctant to grant equity, many Founders believe that they should retain all rewards since they created the original value. This mindset overlooks a crucial reality: securing and retaining senior talent with client relationships for the long term is what truly enhances equity value. The priority should be building a team of senior specialists with strong market reputations from day one. Paying above market rates and offering long-term equity incentives isn’t just an expense—it’s a strategic investment in credibility, accelerated growth, and early wins with high-value clients. Another defining factor is positioning. Many early-stage Consulting firms spread themselves too thin, saying yes to whatever comes their way. Sustainable growth comes from solving a well-defined, high-value problem better than competitors and shaping this into a repeatable process. Firms that dilute their expertise struggle to establish authority. Specialisation builds authority and pricing power. Client acquisition is another common stumbling block. Instead of chasing leads through cold outreach, the most successful consulting firms focus on becoming the reference in their field. Sharing insights, educating the market, and consistently reinforcing expertise creates demand, reducing reliance on unpredictable deal flow. Long-term success comes from consistently evolving expertise, deepening client relationships, and building a market-defining reputation.. Firms that take this approach position themselves as dominant players, creating a business that doesn’t just grow—it thrives on its own momentum.

Great Customer… Late Payment. What Do You Do? In sales leadership, one of the hardest situations is this: You have a customer who is: ✔ Loyal ✔ Respectful ✔ Giving you strong business ✔ Strategically important But… payments are delayed. Now you are stuck between two fires: 🔹 Your company pushing for cash flow 🔹 Your customer asking for patience 🔹 Competitors waiting for one mistake Here’s what I’ve learned: 1️⃣ Separate the relationship from the transaction A good customer is still a good customer. But invoice discipline is a business obligation, not a personal issue. 2️⃣ Protect your company first (professionally) Cash flow is oxygen. If we compromise too much, we damage our own credibility internally. 3️⃣ Push with respect, not pressure Instead of saying: “Why didn’t you pay?” Say: “We truly value our partnership, but I need your support closing the overdue invoices so we can continue supporting you at the same level.” Make it about continuity, not collection. 4️⃣ Escalate softly before you escalate formally Call. Visit. Sit face to face. Most payment issues are priority issues, not money issues. 5️⃣ Never threaten the relationship The fastest way to lose a good client to competitors is to turn finance into a fight. In my experience in the GCC market, strong relationships survive tough payment conversations when handled with maturity. A true sales leader protects revenue… But also protects relationships. That balance is where real leadership shows.

How do you scale a consulting business? Here are some of the practices that have worked in my experience. 1. Hire rainmakers who can sell new work and create followership 2. Make sales a key focus, drive EBIT to 20% and gross margin to >50% 3. Migrate from a deal to an account mentality - have an account management model and hire people to extend existing accounts 4. Align incentives to work winning, work extending and delivery quality alongside practice, IP and people development 5. Have an antennae into the market around what clients are buying and what they value - take every opportunity to ask for feedback 6. Create IP from the methodologies you create – ideally, a licence product you could spin out 7. Build and maintain a culture people love to work in – avoid losing the culture that made you great in the first place  8. Have 1-2 partnerships where you mutually support winning and delivering work 9. Work towards bigger deals as they generally cost the same to sell as smaller ones. Use smaller deals as learning opportunities 10. Ruthlessly manage cost discipline; hire a senior finance lead as soon as you can 11. Only take on risk-reward deals on projects you have done numerous times, and hence, the predictability for success is high 12. Keep a lean support function; hire out of home market if skills can be more cheaply procured without compromising quality 13. Emphasise in all communications the impact you make - consultants love to talk about what they did, but the key is the impact made 14. Keep fee rates under constant review; use pricing to your advantage 15. Become recognised experts - Do your consultants pass the 'googleability' test? 16. Appoint someone to drive resourcing - this can save you on recruitment fees and drive consistent quality hires 17. Balance permanent employees and associates, use associates to manage peaks/troughs and incubate skills 18. Proactively manage your bench; consultants love to be busy - first use for business development and second for internal improvement 19. Use equity through shares and share options to motivate team members 20. Ensure that in the first 20 seconds of someone visiting your website, they know what you do 21. Get tough on client debts, chase them down and incentivise early payment 22. Define your niche specialism - specialists always win out 23. Acknowledge that your team will reshape as you grow 24. Knit together regularly as a team to show cohesion to clients 25. Define your account strategy, avoiding being too concentrated but selective enough to double down on fewer accounts.  Cut the tail of non-profitable/low-potential accounts 26. Be partners, coaches and consultants to your clients.  Different modes work in different situations 27. Bring a combination of relevant expertise and a desire to have an impact on execution from Day 1 28. Have fun along the way (most important) 29. 30.31....What would you add? #managementconsulting #scale #valuecreation Pic:Josh Calabrese,Unsplash

3 Finance Goals for 𝐒𝐭𝐫𝐨𝐧𝐠𝐞𝐫 𝐆𝐫𝐨𝐰𝐭𝐡 For scale-ups aiming for sustainable growth, here are three finance priorities that drive real impact. Choose one, commit to it, and turn strategy into measurable results. 1. 𝐄𝐱𝐭𝐞𝐧𝐝 𝐘𝐨𝐮𝐫 𝐂𝐚𝐬𝐡 𝐑𝐮𝐧𝐰𝐚𝐲 Cash buys time and options. Start by refining your cash-flow forecast - tighten assumptions on both revenue and costs. Look for inefficiencies, seasonal swings, and burn rate drivers. Proactive visibility here means fewer surprises later. 2. 𝐏𝐫𝐢𝐨𝐫𝐢𝐭𝐢𝐳𝐞 𝐇𝐢𝐠𝐡-𝐌𝐚𝐫𝐠𝐢𝐧 𝐑𝐞𝐯𝐞𝐧𝐮𝐞 Not all revenue is equal. Shift focus toward products, services, or segments with the strongest margins. Explore opportunities to upsell, cross-sell, or package offerings that maximize profit per sale. Margin discipline fuels long-term scalability. 3. 𝐒𝐭𝐫𝐞𝐧𝐠𝐭𝐡𝐞𝐧 𝐘𝐨𝐮𝐫 𝐁𝐚𝐥𝐚𝐧𝐜𝐞 𝐒𝐡𝐞𝐞𝐭 Healthy growth needs a strong financial foundation. Assess your working capital cycle, reduce unnecessary liabilities, and preserve liquidity. Consider if it’s time to restructure debt or reallocate capital. A stronger balance sheet gives you room to maneuver. Curious how these apply to your business? Let’s have a conversation. DM me or leave a comment below - I’d be happy help! Follow: #ScaleUPCFO Contact: Mohamed Chaudry

Financial Confidence in challenging market conditions requires clarity, honesty, and adaptability. Just wrapped up a fascinating discussion on shaping a robust finance function, and here are the key points I shared with this particular agency: 💡 Honest Forecasting is Key: It's about building a "culture of realism." Forget inflated targets; focus on accurate, insightful projections. This ensures better decision-making and steadier growth. 🔄 System Transitions for Efficiency: If you haven't already, look to move to a cloud based accounting system. Moving away from manual and unconnected processes can significantly enhance efficiency and provide clearer financial visibility. 📊 Budgeting & Forecasting as Living Documents: Budgets aren't static. They need monthly check-ins and comparisons. Run a live finance forecast formed from the original budget. It allows for real-time adjustments - seizing opportunities and mitigating risks as they arise. 💰 Cash Flow Clarity: Understanding cash flow, driven by understading the different revenue streams in your ageny and the associated invoicing profiles and credit terms. 🎯 Profitability Targets: Target net profit margin, such as the 60/20/20 rule (staff/overhead/net profit), provides a useful benchmark. Defining these targets early on helps keep financial goals in sight and performance on track. It's all about building a strong financial foundation that supports strategic goals and adapts to the ever-changing environment. #Finance #BusinessStrategy #Forecasting #Budgeting #CashFlow #Profitability #FinancialSystems #BusinessGrowth #Leadership