A Nod and a Wink is not good enough. Service Agreements and Contracts is the way forward.
Updated: Mar 28, 2019
Many people starting out in business sometimes get nervous about charging for their services. They feel uncomfortable talking
about money and often under charge or under quote in order to secure a job with a client. But statements to potential clients such as “it won’t take long” or “it won’t cost much” are simply asking for trouble. A supplier once quoted a client £3,000 for a job, and then added that there were finishing touches that would incur additional charges, which would ‘not be too expensive’.
As these rates were calculated on an hourly basis and dependent on the amount of hours’ work required, an assessment ought to have been made and included in the quote. This assessment could have been also adjusted down later on if necessary. No one is going to complain if an original quote is reduced, however, people can become difficult if the original quote is increased substantially. The additional charges in this story that I am referring to actually amounted to £650. On completion of the job, the client paid the amounted quoted, the sum of £3,000 and disputed the additional sum. This was unfortunate, but could have been avoided by the supplier stating clearly the full estimated costs for the job.
When operators are new or inexperienced in business there is always a temptation to form agreements on a nod and a wink. For a while informal arrangements might work, but ultimately there will come a time when some clients do not pay up and then what?
Clarity at the outset mitigates against problems later on. It is therefore important to have a formal agreement of some type to set out the arrangements between supplier and client. A letter setting out terms and conditions is a first step. A contract or service agreement however, is a more professional and binding document.
It includes amongst other things the name and address of the client, the particulars of the company, commencement and duration of job, confidentiality clauses, what happens in the case of a need to terminate the arrangement, resolution of disputes, insurances and obligations, and what happens if unforeseen acts have an impact on service delivery. It also has information on the nature and scope of the work, the document is dated and sets out in more detail in the schedule the services and standards.
There can be additional legal considerations and it is wise to seek legal advice in the construction of a contract or service agreement template, for your particular business, that can be used with slight amendments for each job as long as the services are the same or very similar. Another reason to use contracts or service agreements is so that your business has a professional edge.
Agreeing to do work safe in the knowledge that you have a signed agreement, and the that the client has, by signing, understood the terms and conditions, should make you more relaxed and remove some of the unwanted stress that comes with the responsibilities of running a business. Make that your New Year resolution, to do business differently. Some sites for limited free legal advice:
Written by Yvonne WitterGlobal Entrepreneurship Consultant Winner Business Woman of the Year - Southwark 2009Retired
Founder Director Ampod Ltd www.ampod.co.uk
Churchill Fellow 2010uk.linkedin.com/in/yvonnepwitter