10 Tips for Private Investigators to Increase Cash Flow
- January 19, 2011
- by Scott B. Fulmer
Cash is king. Lets face it: The most difficult aspect of being a self-employed private investigator is cash flow (or the lack thereof). It affects payroll and many other areas of your business. In the long run it can make or break you. Given the condition of the present economy everything must be done to increase cash flow. There are numerous strategies, techniques and fancy theories regarding how to do so. Ill leave those to the folks with MBAs. Instead, lets look at 10 simple tips that you can quickly put into practice to help increase your cash flow.
1. Show me the money! Email your invoice: If you haven't been emailing your invoices to clients, start doing so today. Why drop them in the mail and wait two or three days for the U.S. Postal Service to deliver the invoice? In fact, most accounting software such as QuickBooks will do this for you. This will increase cash flow by helping you to be paid quicker.
2. Pour the wine and cut those checks! When does your clients company cut checks? Don't be afraid to ask him. Is it once a week? Is it every Monday and Wednesday? If so, make sure you time your report and invoice delivery about a day or two beforehand. It doesn't necessarily mean your check will go out the day they cut checks but you've just increased the odds of that happening. Pay special attention to federal holidays, days the company may be closed or when your client may be leaving for vacation. Most folks will cut checks and take care of business beforehand. Look ahead and be prepared. When you get a new client ask him how long it takes to process an invoice and pay you. Knowing this information will help you manage your cash flow and keep enough money in the pipeline.
3. Always (and I mean ALWAYS) get paid up front: I am talking specifically about first-time clients and all domestic clients. With these types of clients I follow something I call the Jay J. Armes* Rule. I always get paid up front. I offer a free consultation, however when I decide to take the case I dont even lift my pinky finger until I am paid a full retainer up front. This is especially important with domestic clients. If you conduct an investigation for a domestic client that is not resolved in the manner in which they expected (and you did NOT get a retainer up front), you will find that their willingness to pay you has decreased considerably in inverse proportion and with the same intensity to how excited they were to have originally hired you. Translation: You ain't getting paid. Always get paid up front.
* For those of you who dont know, Jay J. Armes is considered by many to be the most successful private investigator in the business. This is one of his personal rules of doing business.
4. TAT: Minimize your final report turnaround time: How long does it take from the time you complete an investigation to the time your client has the final report and video in his hands? Do you hand-deliver the final report? Is it available online within 48 hours? You must minimize the time it takes from when you complete an investigation to when the client receives the report and invoice.
5. Do not pay your employees every two weeks: As I previously mentioned, one of the most difficult aspects of a small business is making payroll. I pay my employees on the 1st and the 16th of each month, rather than every two weeks as other companies do. When you pay on the 1st and 16th of each month you must make payroll twice a month. If you pay every other Friday there will be a few months during the year where youll need to make payroll three times in the same month.
6. Ill gladly pay you Tuesday for a hamburger today: Would you be willing to trade $600 or more for $80 every week? You may already be doing so. Are you a one-person operation? Are you doing the work, marketing, reports, videos and invoices? Are you convinced you can't afford to hire someone to do the reports and video? If so, you'd better think again. The fact is you can't afford not to. If you are spending 8 to 10 hours a week or more typing reports and processing video, thats 8 to 10 hours a week that you could be working an investigation or finding a new client. Thats 40 hours a month and 480 hours a year! Why not pay someone part-time to take care of the reports and video (to your high standards, of course). Its better to pay them to handle that work so you can conduct an investigation or find a new client.
7. How do you know when a lawyer is lying? His lips are moving: We love lawyers. However, unless you have an established business relationship with an attorney you'll need to take some precautions before doing business with them. You'll need a written client agreement and you'll need to know beforehand whether your fee will be paid by the attorney or by his client. Your client agreement should stipulate that your invoice is due upon receipt and is not determined by whether or not the case is going to trial, the case is settled, the case is settled in your favor, the client drops the case, etc. If you don't answer these questions before you begin the investigation it'll be a cold day in hell before you get paid!
8. Friends and family discount 20%: Charity begins at home. You wouldn't expect a doctor to perform a surgery for free or a real estate agent to find and close on your house for free. You better be willing to charge your own mother for work you do. I can't fill my gas tank with favors nor can I feed my children with but Im your sister! I do offer friends and family a 20% discount but I still expect them to pay for my services. You want to give back? Donate a percentage of your profits to a charity. Oh, and remember tip #3. Get your friends and family to pay you up front. Always!
9. Do you offer a blue light special? Offer discounts to clients who pay up front or who pay promptly (you decide what promptly means).
10. Make more sales! It's as simple as that. Continue building your business by adding more clients and making more sales. Increase your cash flow by consistently driving money through the pipeline.
As I mentioned, there are literally hundreds of ways to increase your cash flow. Hopefully these 10 simple tips will make a positive impact on your business.
Scott B. Fulmer is a private investigator, writer, speaker and President and CEO of Scott B. Fulmer Investigations, LLC, based in San Antonio, TX. His firm specializes in Surveillance, Insurance Liability and Workers Comp Investigations. He has been in the security and investigation field for over 20 years and is a frequent contributor to PInow.com. He is a Gulf War veteran, husband and father of three. Mr. Fulmer will be speaking on the topic of mobile and stationary surveillance at the upcoming Mid-Winter Conference of the Texas Association of Licensed Investigators. Please see TALIs website for more information: http://www.tali.org/11MidWinter/11_mid_winter_conference.htm. He is available to speak to your group, seminar or conference. You may contact him at [email protected].
If you would like to redistribute this article or any other content for your website, newsletter or other publication, e-mail [email protected] to find out how. And if you're interested in writing articles about the private investigation industry, PInow.com is always looking for guest writers to share their industry knowledge.
To learn more about becoming a member of PInow.com's trusted network of investigators, contact us online or call (888) 997-4669.