When you are looking to enter a business relationship with a client, it is extremely important that you have a contract. A contract not only defines your relationship with a client, but it also protects you from any issues of liability in the event that something goes amiss. It also will guarantee you payment in the event that your client decides to not honor the terms of the arrangement, and it overall provides a legal cover for both parties in case the relationship sours.
While it may seem like having a contract is an unnecessary step, the truth is that it is the most necessary thing you can do. If you don’t want to create customized contracts, you can just use a standard or boilerplate contract, and then just create it into a template for the different services that you provide. In that sense, a contract can help you and not be too much of a burden, although it does need to be tracked for performance to see if the contract templates you create are actually serving you. With that in mind, here is why you need to make sure that you have contracts in place when working with clients
Contracts are used to protect businesses
Most people who work with clients do not end up having any legal issues with them. However, just because something hasn’t happened does not mean it won’t happen. Even if you’ve had a longstanding relationship with a client, they might become dissatisfied with your deliverables and refuse to pay for your services. They might have even gone over budget and then refuse to pay for the difference in time or materials that they have cost you.
It is also possible, although not likely, that as a service provider, you have under-delivered relative to what the client’s expectations are. While this usually does not happen with legacy clients, it certainly can happen often with newer clients, and it is important that these expectations are legally spelled out in the form of a contract. This can help protect you and make sure that the client does not turn around and claim that they did not get what they feel like they were owed, which can happen more often than you think.
Contracts should be tracked to measure performance
Using a process called contract lifecycle management, service providers can actually get a sense of how well their contracts are performing. For example, if a service provider agrees to do a web design job for a flat rate of $5k, but then fails to specify what level of revisions are needed in the contract, they find that the picky client requests way more revisions than they were expecting. This can make the web designer work twice as many hours as they were planning, which would halve the hourly rate they were thinking they would be getting paid.
Using contract lifecycle management, you can assess where you went wrong with your contract creation process and make improvements in the future. When you go get other clients in web design or whatever service you provide, you can then know to limit the amount of revisions you guarantee on your work so that you can get an hourly rate that you believe you deserve.
Overall, anyone working with one or more needs to have a good idea of what they are looking for out of the relationship. By creating your own contracts, making sure that clients sign them, and then tracking these contract templates for performance using contract lifecycle management, you will ensure that your experience working with clients goes as smooth as possible.
