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#205577 - 06/29/04 05:33 PM out of pocket expenses for consultants
Red Offline
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Red
Joined: Dec 2002
Posts: 345
New England
Is there a rule of thumb on how much out of pocket expenses s/b in relation to a contract? Say 25% of the contract price? Is it customary to negotiate for caps for expenditures? Do you ever ask for substantiation of the expenses? Currently we just get a lump bill for expenses quarterly.
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#205578 - 06/29/04 06:11 PM Re: out of pocket expenses for consultants
Anonymous
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If you don't cap the expenses, I'd ask for a itemization of the out of pocket expenses. We asked for a breakdown onetime and they came back with a breakdown that was less than originally submitted.

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#205579 - 06/29/04 06:13 PM Re: out of pocket expenses for consultants
John Burnett Offline
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John Burnett
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Cape Cod
You are free to negotiate whatever you think you can get away with, including caps on OOP expenses. And you should ask for contract language allowing you to require documentation of any OOP larger than X, depending on your comfort level.

In my last life, we had an accounting firm low-ball us on their bid for the first year of a three-year engagement. Then at the end of that year we got a whopping OOP invoice. We played hardball and negotiated the size of that bill, but only after demanding documentation. It would have been easier, I think, if the contract provided for these things.
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#205580 - 06/29/04 07:17 PM Re: out of pocket expenses for consultants
David Dickinson Offline
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David Dickinson
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Central City, NE
I am a consultant. What kind of OOP would your consultant have? We bid for consultation and travel expenses. If we go over, we lose - not the client. Are these unforseen travel expenses?
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#205581 - 06/29/04 07:30 PM Re: out of pocket expenses for consultants
Red Offline
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Red
Joined: Dec 2002
Posts: 345
New England
No, travel, food, lodging, misc (postage, etc). In the past we have agreed to pay for OOP. In the 2nd year of engagement, OOP doubled- they were not here any more and there has not been any large increases in room rates around here.
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#205582 - 06/29/04 07:42 PM Re: out of pocket expenses for consultants
David Dickinson Offline
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David Dickinson
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Posts: 18,762
Central City, NE
I would ask for a complete itemization before paying. I would also think again about dealing with this company as it appears to be an unethical act.
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#205583 - 06/30/04 05:50 PM Re: out of pocket expenses for consultants
Red Offline
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Red
Joined: Dec 2002
Posts: 345
New England
Thanks so much for the input. You have helped me help my employer save a few $$. Just curious, what type of consultant are you, David?
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#205584 - 06/30/04 06:02 PM Re: out of pocket expenses for consultants
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
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#205585 - 06/30/04 09:56 PM Re: out of pocket expenses for consultants
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
Quote:

David's web page:

Bankers Compliance Consulting



Thanks Dan. You should find all the info you might need at our website. If you have further questions, contact me.
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#205586 - 07/01/04 01:38 AM Re: out of pocket expenses for consultants
Risk Officer Offline
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Joined: Apr 2001
Posts: 205
Dallas
I am currently a consultant, but have also been on the other side of the fence and managed consultants while working for a community bank. Our out of pocket expenses generally vary widely depending upon overnight travel (hotels, meals) and airfare. We generally provide a range of out of pocket expenses if they will be significant (i.e. 10-12% of project cost). Some clients ask for a cap on expenses, and some want everything rolled into one price (accomplishing the same thing).

Switching gears and going back to my banking days, there were times I asked for and got a cap on expenses, and other times I didn't ask. If I thought the actual billed expenses were out of line, I would ask for the detail, otherwise, I wouldn't.

Bottom line, be comfortable with the consultants / auditors that you are using. If they can't provide you with a good estimate of the expenses, you might consider asking for a cap.
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