5 Contract Policies That Will Save Your Business Time and Money
Starting a business is hard. I see you working TIRELESSLY to make that money, and time, well, there is never enough. Let’s talk about the 5 Contract policies that will help protect those two precious commodities: time and money.
1. Contract Term – How long are we doing this?
Adding an end date into your agreement is not always required, but here’s why it can work for you, and what you need to keep in mind.
As a new business owner, it’s not unusual to accept a few offers that are a little lower than you had initially anticipated, just to get that initial flow of clients. By defining an end date to the contract, you are allowing your future-more-experienced-self the opportunity to re-negotiate rates at the end of that period. If you are confident in your ability to be rendered irreplaceable and know a price increase is in the pipeline, a shorter contract term is something to consider.
2. Payment Policies – How much, How often and How will I get that money?
You might be surprised just how many people forget to layout appropriate payment policies in their agreements. Crazy right? Contracts are for your protection; this is your time to clearly lay down your expectations.
Here are the essentials of what needs to be made VERY clear…
- How much you want to get paid and don’t forget the requested currency.
- Frequency of the payment, pre or post-delivery of the service?
- How you want to accept payment. Every method has different fees involved so it’s important to know what this looks like before you agree to anything.
Outline what happens if they don’t pay you? Will late fees be involved? Spoiler: Just by outlining the potential of a late fee can actually diminish the likelihood of needing to enforce it. #winwin
3. Refund Policies – Avoid the ‘uh oh’ with a clear policy!
No one wants to enter into an agreement having to consider the possibility of issuing a refund, but it’s important to understand when a refund is an option and to avoid all that nitty-gritty awkwardness.
A refund policy can include things like: What determines the activation of a refund, stipulations of said policy, and whether the refund is made in full, partial or not at all. You can outline how refunds will be made, and if there is a time limit on it!
There is no wrong answer when it comes to a refund policy, but you do need a refund policy that you feel comfortable with, and one that works for your business.
4. Termination Policy – How to get out of a Contract
It’s imperative to understand how quickly you can get out of (i.e. cancel) an agreement, should the need arise. Creating a termination policy that covers all the bases for severing the partnership is absolutely necessary. This will protect both parties to the agreement. Allowing you the security of knowing your rights in terms of how many days notice you can expect to terminate the agreement, the potential for payment in lieu of days notice, whether or not severance would be paid and what would determine immediate termination.
There are two currencies on this planet, time and money, and they’re protected in the realm of this clause by reducing ambiguity in the process of terminating an agreement. We like to think of it like a fire extinguisher, you don’t need it until you do. Don’t be the one that ignores the necessities, nobody wants to get burnt.
5. Entitlements – The Scope of Work!
Say it with me now: Establish 👏 those 👏 boundaries. Entitlements should outline what the customer gets, what deliverables you are promising, AND, more importantly, what you are not delivering.
This is the perfect place to outline all the services agreed upon, almost like a checklist! By doing this, you are enforcing the understanding that the client is not paying for the whole pie and that if it is not listed, then they do not get it!
As you grow your business and expertise, you deserve to get paid for what you are worth. If you set out clear expectations, you are allowing yourself to level-up and charge for those items or additional services in the future. Essentially, it can stop you from giving away the house, the car and the dog for the price of the 2008 Honda Civic. ( We are not all Oprah – and you get a car! – get it?)
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