by Anand Srinivasan, founder of LeadJoint.com
As a business owner, your focus and specialization lies in convincing potential clients as to why they should choose you to resolve a specific challenge they face. Yet, many small firms and private contractors make the mistake of immediately going straight to work once an agreement is reached without creating a legally binding contract that spells out the exact terms and conditions of their relationship. More than anything, a contract lets you set and manage expectations in order to assure a high-quality service while simultaneously minimizing the risks for potential disputes that may ruin your reputation or even lead to legal complications.
Contract creation may seem like a daunting task. However, it’s not always necessary for it to be a process requiring input from a team of lawyers or needing multiple drafts to reach a compromise between two parties. Digital solutions like electronic contract management systems have made it easy to create and manage business agreements for cheap. Despite this, it’s critical that these digital contracts mention at least your billing structure, scheduling, and contract length for them to be effective.
1. Billing Structure.
Information related to payment and cost of your service is often the greatest point of friction when it comes to onboarding new clients. To safeguard yourself from potential payment-related headaches, it’s important to have a detailed payment structure that you and your client agree to abide by. This protects you from mismatched expectations and also has a written agreement about the kind of payment channels you will be making use of and how frequently the payment will be made. Also, don’t forget to include a clause on potential penalties in case of late payments. Most contracts include a grace period for clients to make late payment after the receipt of an invoice and are generally associated with a late fee or interest. Failure to pay after the end of a grace period could invite legal action. This incentivizes clients to make timely payments sooner rather than later.
2. Scheduling.
The contract needs to make a note of your availability in clear terms. You should set clear boundaries as to when you are held liable for communication and when you are expected to work.This way, the clients will know when to reach you and also protects the service provider from potential abuse. Ideally, you may want to be as specific as possible with respect to the start and finish dates. Your contract may also want to define the tasks to be completed and the potential milestone dates when goals are to be met. It is also a good idea to specify overtime charges in your contract.
3. Length of Contract.
If you’re drawing up a contract for a quick one-time project, you probably do not want a client to expect you to work beyond the scope of this project. In case they are interested in continuing the relationship beyond the specified duration, you may also include the terms and conditions for the renewal process. If you already have a lengthy contract in place, it is recommended that you include conditions for early termination in which you describe the process of how a contract can be canceled.
If you’ve included these basic elements in your contract, you can confidently e-sign away and expect projects to run smoothly. After all, the last thing you want is have your attention diverted away from providing a great service and towards clarifying issues.
Anand Srinivasan is the founder of LeadJoint.com, an online lead generation tool for digital marketing agencies. He is also a part-time marketing consultant and has previously worked with some of the most promising Indian startups.
