Protect Yourself – 5 Tips For Great Client Contracts

August 14, 2019

When you deliver great service to your customers, you expect to be paid accordingly. Unfortunately, this doesn’t always happen – or at least not in the routine, smooth way you’d hope.

My Mistake

I fell victim this with one of my first customers (probably my biggest customer to date at that point) who ended up cancelling a website build I was doing after I’d completed about 75 percent of the work. However, I only ever got paid for 25 percent of the work I’d done.

Add to the fact that the project had dragged out over four months or so (I’d expected completion within a month) and that the customer was constantly changing their mind and giving very vague instructions, and I’d ended up losing lots of time for virtually no gain.

The problem was my own naivety – while I had set out a contract, I’d been far too trusting of the client and taken them at their word and based on my judgement of their character.

So, where did I go wrong?

First off, I’d set a low deposit of 25 percent to start the project with the rest due when the site went live. As I was just starting out, I didn’t want to scare them off the project with a high upfront fee. I knew the project would only take me a couple of weeks or so to complete, and I’d also allowed a couple of weeks for them to source material for the new website. I figured that I’d have the total fee within a month anyway, so what did it matter that my deposit was low. Relations with the customer were good at this point, so what could go wrong?

As I was keen to impress, I was also going above and beyond the terms of the contract to deliver work outside of the contract, e.g. website content (as the client was giving me nothing at this point!) As you can guess, things started to drag out and I was forced to call a meeting to discuss what I needed from them, and also to get feedback from them on what I’d done. I was keen to complete the project ASAP, so pressed on to deliver on my end.

All we were waiting for to complete the website was content and images from the client. Finishing the job was going to be quick from here on out, I assumed.

I gave them two weeks to review the website and gather their content (at this point, we were four months in on the project). However, I heard nothing. I followed up with various emails, but was just getting ignored.

Eventually, they got back in touch to arrange another meeting but before this could happen, they emailed again to cancel the project, with excuses that personnel had changed around and there was a new member of staff wanting to use his own contacts for the website.

They also believed that the deposit would compensate me for my time thus far (not even close!) I stayed professional and courteous but explained how they’ve messed me around and that it was poor business etiquette. However, the bottom line was that I wasn’t getting the rest of my money.

Now, I could perhaps have fought for extra compensation for my time, but the fact is, I only had myself to blame for naivety and a poorly-devised contract. I’d set myself up to be taken advantage of and given myself a weak case to claim back what I was owed. The small deposit and wording where full payment was due when the website went “live” meant that, while they’d behaved poorly, they hadn’t actually broken my contract terms.

Instead, I decided to chalk it up as a loss in money, but a huge gain in experience – I now know now the pitfalls that can arise with difficult clients, and have since set far more stringent terms for my contracts. You cannot assume that a client will honour their word – you need to have it in writing, in case they go back on it, so you have something solid to come back and to ensure you’re paid fairly.

So, here are my top tips for writing out client contracts:

Set out your terms of payment

Give the customer a clear date/period by which the invoice is to be paid by. If they miss this date, you are well within your rights to follow up and demand payment. I set 14 days, as this means they have time to get finances sorted if need be, but means I’m not waiting forever after completing a project.

Set the deposit to cover your time/costs

I now charge a 50 percent deposit, plus hosting for the year (if they are buying this from me too) before I even start any project. This means I’m still being paid a fair amount, even if a client is delaying on their end.

Set checkpoints for work

Set specific milestones where you will review progress with the client (with dates). This let’s them give feedback to you before you’ve put too much work in on something, they’re not keen on. It also gives you a chance to set out again what you need from them and means things aren’t lost in email trails. If it’s a larger project, associate these milestones with further payments so you’re not going months before you get any money.

Take control of the project

Set a completion date for the project, where full payment is due. If this date is missed through no fault of your own, state that full payment is still required by this date. You still have bills and costs to pay, and shouldn’t suffer if a client is delaying. It gives them plenty of incentive to meet their obligations on time too. I also state now that if a project exceeds the completion date, any further work will be billed at my hourly rate (unless it’s my fault it’s not ready). This may seem harsh, but it actually works – all projects have finished on time ever since I’ve implemented this. I’ve never had to actually enforce it!

Get it signed

Never start work on a project until you have a signed contract from the client. Don’t be too keen to get started (even if you have time free on your schedule) if you don’t have it in writing that they’ve agreed to your terms. Even if you like and trust them, it’s easy to misjudge customers and you can easily end up where I was with my first big client. Don’t take them at their word, take them at their signature! That way, if the project goes downhill and they refuse to pay, you can just show them the contract they signed.

 

Now, these may seem a harsh set of rules and you may worry you’ll come across as not very customer-friendly. However, I always explain that these rules are in place not just for my benefit, but for theirs too – it means they get their website completed on time and to a high standard that they’re happy with.

The type of client it puts off, to be honest, is the type of client you don’t want. If they’re worried that they’ll pay you for overtime, it’s probably because they don’t plan to get on with things their end, and you’ll probably be chasing them for every invoice to be paid. You’re better off without that headache!

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