A Client Agreement is a MUST HAVE for Service Businesses
There is one legal document that every service business must have before any work begins. That document is a client agreement. Sometimes business owners look at a client agreement and ask if they really need all the legal mumbo jumbo. Uhhh yeah you do.
You must secure a signed document from your clients guys! Not a handshake or a nod, but get a physical signature. A handshake isn’t enough to cover you if your client decides to screw you. Which may happen at some point.
A client agreement outlines what your relationship is with your customer and it keeps both parties a lot more honest and fair. Your client knows what is expected and what their responsibilities are as well as what the result is if their end of the deal isn’t kept. I’m so serious! It doesn’t matter if you are a consultant like me or any other service professional.
So what should you put in your Client Agreement?
1. Your PRICING of course!
You want your business to do well so why not make your rates clear? Put them down in writing during the initial stages of the project. Do you charge by hour, or by complete project? Make sure your client has agreed to what you are charging so that they can’t argue about your pricing after the contract is signed.
Another BIG thing is making sure your client knows your payment schedule. It can depend on the industry that you’re in, but I would always advise that you take some type of deposit up front and outline when it is that the remaining payment is due. If you split payment up over a certain project milestone, mention it in your client agreement.
Also, the method of payment needs to be included in your contract. Do you accept payment via direct deposits, checks or PayPal? How long a grace period do you give when receiving payment? Make sure you have all of this information straight with your client before starting work.
Also mention what happens if payment is late. I recently started adding late fees to my invoice to combat the client whose check is always in the mail problem.
3. Revisions and rewrites
We’ve all had a client who just doesn’t know what they want. Maybe they are perfectionists? …who knows, but it happens. You also get that client who changes the entire focus of the project last minute forcing you to start from scratch with the same deadline.
Instead of spending much of your time revising, redesigning or rewriting, include a clause in your contract that outlines how many included revisions your client gets and then charge for anything in excess.
4. Kill Fees
Sometimes things happen and a project gets cancelled. You don’t want that to mean that you don’t get paid for completed work. A kill fee clause saves you from being the disadvantaged party in the event that a project gets closed. Do you get full payment if the client cancels? Does the client get a refund of their deposit if the project is closed early on? Being as detailed as possible will work in your favor when these unexpected events occur.
A deadline schedule is a necessary element of a client agreement. Having a deadline will allow you to schedule your future projects even before you start working on them. This ensures that you don’t take in too many projects that need to run simultaneously and also helps in keeping your working schedule filled, giving your income a bit more stability.
If you are creating any copyrightable works for your client then copyrighting your work is a must if you want to avoid having a client run away without paying for your work or use it without permission. It also serves as a form of protection for your client. When they have made full payment, they have essentially purchased the copyrights from you… unless your client agreement says otherwise. What works are copyrightable? Thats a long discussion for another day, but generally graphical, pictorial, sculptural, literary and musical works are some areas that are copyrightable.
7. Inactive Projects
Sometimes clients become unresponsive or fail to provide you with the required interaction needed to complete a project. For me, this includes failure to provide me with content or failure to provide any revisions or feedback. Set a policy whereby a project can be marked as inactive due to failure by the client and maybe charge a fee to reactivate the project or invoice client for work done to date and close out the project. Be sure to include some type of clause for this situation in your client agreement