During hard times (like the ones we’re entering right now), it’s important to make sure that your consulting clients are of the highest calibre. It’s important to have high quality clients all the time but when the money’s rolling in and a few of your clients stiff you on the bill, it’s not the end of the world. It’s still a really crappy thing for them to do but if you’ve spread your efforts out amongst a fair bevvy of clients and one of them turns out to be a turd in the punchbowl, you can scoop the turd out and… okay. This analogy is not going well. Coming back to my point – in hard times when certain segments of your customer base are hurting (or dying), you need to avoid clients that don’t pay like the plague. References can help you do this.

I’ll give you an example – a while back, a client of mine referred me to another potential client. The referral came with caveats – the lead was someone who had a reputation for not paying vendors when they didn’t think the work was of sufficient quality. I considered the warnings but also thought “it’s an interesting project – I’ll just ask for a healthy downpayment before I do any work.” Then I heard from a close colleague that she herself had been stiffed by this client. That did it for me and was a good reminder that I need to be pickier about my clients.

How can you ask for client references? Just ask. They’re not going to give you the names of vendors that they have screwed over but you might get some hints from their better clients. Also ask your network. Habitual vendor-screwers are not subtle. They leave a wake of destruction across the entire community.

Back when I was an employee, I had two jobs with two different companies in two very different industries who got ripped off by the same client – a health food company. In talking to other folks in the industry, I soon learned that my two employers weren’t the only victims of these losers.

Remember, when push comes to shove, if you can’t afford a lawyer and a client walks out on the bill – the chances are high that you’re not going to get paid. Make sure you check references and get a healthy (25-50%) deposit up front. If they can’t come up with any money before you start, they might not be the kind of client you want. Feel free to share your stories of clients gone bad here. Just don’t use names. No one needs a libel suit on top of getting stiffed.