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The Client Is Unhappy-Do I (Gulp!) Return the Money?

In the course of any consulting career we’re inevitably going to fact moments when the buyer says, “You didn’t accomplish what I had expected. We want our money back.” And there will be those times when the buyer is probably or definitely right.

Let’s put aside the situations when the client has changed his or her mind and you’ve actually delivered the originally-desired results. And let’s ignore for the moment the fact that you should always have clear objectives and metrics to assess the progress toward results at any give juncture. The best of all possible worlds, Voltaire aside, doesn’t always eventuate.

So, what do you do? Let’s assume that the have a $25,000 contract, you’ve already collected $15,000, and $10,000 is outstanding, just to make things more interesting.

My response to these situations is to examine the options that are available. By suggesting viable options to the buyer, you can defuse hostility if it exists, and you can involve the buyer in a collaborative decision about what to do. Here are the normal options that I would see:

  1. Offer to continue to work on the project given the client’s current goals, provided that they are reasonable to accomplish and the buyer agrees to put the revised goals in writing with clear measures to signify accomplishment. Establish a defined time frame (from 30 to 90 days) finish the work, and get paid.
  2. Ask an objective third party to evaluate the existing project and to determine whether it has been successfully completed or not. This should be a peer of the buyer who in uninvolved to this point (never a subordinate or superior) and who can make a rapid evaluation. If that party feels you’ve met the original objectives, the buyer pays the balance due. If that party feels you haven’t, then the buyer has the option of #1 above or stopping now without paying he balance. (If the third party says “yes and no” or “partially,” offer to continue or to stop now with half the balance payable to terminate the project.
  3. Consider stopping immediately, waiving the balance due, but asking that the buyer sign an agreement that no other claims or liabilities exist. In other words, waiving the balance effectively terminates your accountabilities.
  4. Offer to refund a portion of the fee already paid, from half of it to all of it, if you deem that your poor performance is mainly responsible for the lack of results. This might include an illness forcing you to miss key dates, failing to appear at important meetings, employing a methodology which failed, etc.

It’s probably that you’ll have this predicament once or twice in your career and, with high-risk clients, even more often. You don’t want to enter legal procedures with a more powerful and well-bankrolled adversary, and you don’t want your name ruined in a market segment or industry. There’s no shame in professionally resolving a dispute about results. After all, if you haven’t set objectives and metrics and carefully interacted with the buyer all along, you are at fault to some extent in any case.