Chapter 20: Financial Infrastructure
Proper financial infrastructure protects your liability, simplifies taxes, and makes your business more professional.
What You'll Learn
- Modern banking solutions for consultants
- Maintaining corporate hygiene
- Payment terms that work
- Time zone and availability pricing
Modern Banking Solutions
Tech-Stack Banks
Options like Mercury, Brex, and Ramp offer consultant-friendly features:
| Feature | Benefit |
|---|---|
| Integrated contractor payments | Easy W-9 collection and payments |
| Virtual card creation | Expense management |
| Modern interface | Easier than traditional banks |
| Responsive support | Problems solved quickly |
| API access | Automation possibilities |
"These modern tech stack banks are not actually banks. They're modern wrappers for institutional banks, so you can trust them—they still have all of the FDIC insurance."
For International Consultants
- US-based entities accessible to international founders
- Modern banks often have smoother onboarding
- Delaware LLCs popular for international consultants
Maintaining Corporate Hygiene
To preserve liability protection and maintain clean accounting:
Separate Financial Accounts
| Do | Don't |
|---|---|
| Dedicated business bank account | Mix personal and business funds |
| Business credit card | Pay business expenses personally |
| Track all transactions | Commingle finances |
| Document transfers | Make unexplained movements |
Pay Yourself Properly
- Set up owner's draws or distributions
- Document the payment schedule
- Keep records of all transfers
- Consult with an accountant on structure
Record-Keeping
| Record Type | Retention |
|---|---|
| Contracts | 7+ years |
| Invoices | 7 years |
| Bank statements | 7 years |
| Tax returns | Indefinitely |
| Receipts | 7 years |
Consider bookkeeping services to ensure proper documentation.
Payment Terms That Work
Standard Structure
| Term | Description |
|---|---|
| 50/50 Split | 50% upfront, 50% at 45 days |
| Upfront Discount | 10-15% off for full payment at signing |
| Milestone | Payments tied to deliverables |
Early-Stage Startups
For startups, structure for their cash flow reality:
- Fixed multi-month engagements rather than monthly retainers
- Example: $25,000 for 5-month project
- If delays occur, extend engagement rather than refund
Success-Based Options
- Base fee plus bonus tied to funding milestones
- Lower initial investment with larger payment on success
- Aligns your compensation with their outcomes
Handling Payment Negotiations
"Can we pay monthly?"
"We can do monthly payments, though the total investment would be higher to account for the extended terms and administration."
"Can we pay net-30/60/90?"
"Our standard terms are payment on acceptance. For net terms, we add X% to cover financing costs. Many clients prefer the prepayment discount instead."
"Can we pay after results?"
"Our success-based option includes a small initiation fee of $X and larger success payment when we achieve [specific metric]."
Time Zone and Availability Pricing
Not all hours are equal. Your pricing should reflect this.
The Problem
"Working with clients in Singapore and India while based in North America created health issues for me due to constant late-night calls."
Suggested Time Zone Premium Rates
The exact multipliers vary by consultant and market, but common approaches include:
| Time Window | Suggested Rate |
|---|---|
| Standard hours (9 AM - 6 PM your time) | Base rate |
| Early morning (5-9 AM) | 1.25-1.5x rate |
| Evening (6-10 PM) | 1.25x rate |
| Night hours (10 PM - 5 AM) | 2x rate or decline |
Adjust these based on your personal tolerance, client value, and how often off-hours meetings occur. Some consultants prefer flat premiums; others simply decline certain hours entirely.
Contract Language
Consultant's standard availability is Monday-Friday, 9:00 AM - 6:00 PM
[Your Time Zone]. Meetings outside these hours require 48-hour advance
notice and may be subject to availability. Regular meetings outside
standard hours will incur a 50% premium rate.
Boundary Enforcement
"I had to tell a client: 'You need to stop booking 5 AM meetings without checking with me first.' When they continued, I offered a refund and ended the engagement."
This firmness actually increased reputation and referrals.
International Client Considerations
Working across borders adds complexity beyond time zones:
Payment Terms: European companies often default to net-60 or net-90 terms. Build this into your pricing or negotiate for shorter terms upfront.
Regulatory Requirements: GDPR and other data protection regulations may affect how you handle client data, especially for EU-based clients. Factor compliance into your engagement scope.
Scheduling Reality: Finding workable meeting times takes effort.
"With Indian clients, it took us about three weeks to figure out scheduling, and every meeting was from 6-9 AM."
Build in extra time at the start of international engagements for logistics to settle. What feels frustrating initially often becomes routine once you establish patterns.
Using Refunds Strategically
Refunds aren't about giving money back—they're about alignment and integrity.
When to Offer Refunds
| Situation | Refund Approach |
|---|---|
| Client won't commit necessary resources | "Happy to refund until it's priority" |
| Boundaries violated | "This isn't acceptable—let's refund and part" |
| Outcomes unachievable | "Without X, we can't achieve Y" |
| Relationship isn't working | "No hard feelings, here's your remainder" |
How Refunds Build Trust
- Shows confidence in your approach
- Demonstrates you're invested in outcomes
- Often causes clients to recommit
- Maintains relationships for future
- Generates referrals even from "failed" engagements
Payment Structures That Enable Refunds
| Structure | How It Enables Refunds |
|---|---|
| 50/50 split | Easy to refund half if not progressing |
| Discounted upfront | Include refund guarantee |
| Milestone-based | Stop at any milestone |
Insurance Considerations
Common Types
| Insurance | Purpose |
|---|---|
| Professional liability | Errors and omissions coverage |
| Cyber liability | Data breach protection |
| General liability | Accidents, injuries |
When It's Required
Many clients require insurance in their contracts, especially for: - Work involving sensitive data - Enterprise clients - Government contracts - Healthcare or finance
Tax Considerations
Quarterly Estimated Taxes
As a consultant, you're responsible for: - Federal estimated taxes (quarterly) - State estimated taxes (if applicable) - Self-employment tax
Deductible Expenses
| Likely Deductible | Track These |
|---|---|
| Software subscriptions | Tools for work |
| Home office | Dedicated space |
| Professional development | Courses, conferences |
| Travel for clients | Transportation, lodging |
| Health insurance | Self-employed health insurance |
Work with a CPA who understands consulting businesses.
Action Items
-
Set up business banking. Open a dedicated business account with a modern bank.
-
Define your payment terms. Create your standard payment structures.
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Document availability. Write your time zone policy and premium rates.
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Get insurance quotes. Research professional liability coverage.
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Find a CPA. Identify an accountant who works with consultants.
Key Takeaways
- Modern tech-stack banks (Mercury, Brex, Ramp) simplify consultant finances
- Maintain strict separation between personal and business finances
- Standard payment is 50% upfront, 50% at 45 days (or discount for full upfront)
- Price time zones appropriately—not all hours are equal
- Strategic refunds build trust and maintain relationships
- Insurance may be required by clients, especially enterprises
- Work with a CPA who understands consulting for tax optimization