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When small businesses think about protection, many owners think of the basics – locks on the doors, secure email & data, trustworthy employees. Very rarely, if ever, do they think about their clients and customers and this can wind up being a costly mistake. Far too often, small business owners get into a mindset where they think that they can always trust their customers to pay on time, to not take advantage of them, and not to sue in case of a mishap. Even if the customer you are doing business with is a long time friend or client, it is very important to get the details of your working relationship down on paper. If anything, it will allow you to separate your business decisions from your personal life. What to Include in a Client Contract What you choose to include in the parameters of your contract will depend heavily on the product or service you are providing. If you are a small business owner providing a widget, your contract should stipulate how many widgets you will be providing and at what cost, when you expect payment for those widgets, when the customer can expect to receive the widgets, and what responsibilities will be taken if either party fails to hold up their end of the bargain. Well that covers widgets, but what about something a little more vague – like consulting services or even software development? In our widget example from above you outlined how many widgets you would be providing to the client. In the services or consulting world, this would translate to what is commonly known as the “Scope of Work” or “Statement of Work” portion of the contract. This allows you to specify exactly what you will be delivering – any requests outside of this portion of the contract would not be covered and would potentially require another contract or agreement. Payment terms need to be laid out in consulting contracts as well, just like if you were delivering a tangible product and demanded payment upon delivery of the goods. Since consulting and even software development can take weeks or months to complete, this portion of the contract needs to be very clear. Do you want to get paid all upfront? Are you willing to wait until the very end to receive payment? Let the contract stipulate the payment terms and make sure that your new customer is holding up their end of the bargain. Lastly, the item that is unique to most service delivery agreements is what is called the “Statement of Liability.” Unlike our widget example, things tend to go wrong a lot more with consulting and IT services than they do with widgets, and without a contract, both parties will be pointing a lot of fingers and hoping that none are pointing back at them. Your new client contracts should specify who is held liable if anything goes wrong. If a consultant makes a recommendation that loses the customer money, the liability for that event should be clearly stated in the contract. If a software program or the network infrastructure crashes and data is lost, you don’t want to be held responsible so make that caveat in you IT agreements. Although they can seem complicated, creating contracts is a vital part of doing business, no matter how many years you’ve been functioning without them. In today’s economy, you can never have too much protection. If you are developing client agreements for the first time, try out a contract template software program that will allow you to easily put together a contract that both parties can agree to. For more information on creating custom IT contracts, please visit www.ContractEdge.com.
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Protecting Yourself from Your New Clients
