A clear, simple contract is imperative to the success and sustainability of your small business. Keep your contracts simple and use straightforward, precise language so all parties understand the terms of the agreement – unclear wording and late payments can jeopardize the delicate client-business relationship.
Setting Up Client Contracts
Here are some guidelines to keep in mind when drafting your client contracts:
- Outline the exact work that your business will deliver. Be specific!
- Include any important dates and/or deadlines. This keeps you to a schedule, and clients love it when you deliver early.
- Include a policy for revisions and edits, if applicable. Establish how many revisions are included in the base cost and how additional edits will be charged.
- Include your intellectual rights and release information (this may require consulting an attorney).
- Include a termination clause, preventing clients from canceling their order/engagement after a certain date.
- Include an arbitration clause (detailed below)
- Include a payment schedule. This should be structured to best serve your business. Consider when you need money to complete a project, the interest rate on any late payments, and any return policy, if applicable.
Types of Contracts
There are 3 typical types of client contracts. Each satisfies a different set of needs, so pick the one that works the best for your business.
- In Retainer contracts, clients pay a flat fee to reserve your services for a set amount of time each month. Keep track of the time you spend and have an agreement in place should the project go over the time reserved. Some clients may take advantage of the retainer and make costly changes to the project, so include language allowing you to charge for this “scope creep”.
- Hourly contracts are just that: you bill the client for each hour you work. Clients sometimes lose track, so consider creating a cap. Notify the client as you near the cap and let them extend the hours if needed.
- Project-based contracts are good for new client relationships because they allow clients to hire you on a project-by-project basis. They allow both parties to see if they work well together in a relatively low-risk way. Make sure to clearly outline the scope of the project and what the client can expect, and set mid-project meetings and expected project milestones.
Send invoices quickly! This increases your chances of getting paid on time and in full. If possible, send invoices electronically. It’s faster, provides easy access to your records, and most clients now expect to do business digitally. If your business has recurring clients and orders, invest in recurring billing. They’ll appreciate the consistency and you can easily charge their card each month. Keep things thoughtful and organized by tracking payments and thanking clients for paying on time.
What About Disagreements?
Disputes arise, even after the contract is signed. If your contract is clear and the provisions are thorough, there is less room for the client to wriggle out of their obligation to you. To be safe, however, you should include an arbitration clause. Arbitration clauses help you avoid costly litigation, should you and the client come into conflict. Most often, these clauses require everyone involved to defer to the decision of a neutral third party. Have an attorney look at the language to check that you’ve referenced the appropriate statutes, terms, etc.
Contracts define your relationship with your clients and employees, so it’s very important you get them right! Contact G & G Law to make certain your interests are protected.