Tuesday, January 5, 2010

Client Contracts - Key Ingredients

The other day I was having a casual conversation with a colleague of mine who was wondering if she should be using contracts with her clients. I immediately responded YES!

I had begun using contracts the second I was in business but not on a consistent basis. My lack of inconsistency allowed for a couple of my employees to break a non-compete agreement they had with me and go to work directly for what I thought at the time was my best client. I had neglected to have that client sign a contract with me.

Now, no matter what, I put contracts together for all of my clients, no matter how short or long our engagement is. My contracts spell out the scope of the work and are very specific. I do this so that the client is very clear about the work we provide and their responsibilities in our working arrangement.

Here are some things you will want to include in any contract you put together:

1. What you will do for the client. For example: enter bills, cut checks, collate, prepare bank reconciliations for all cash account, enter credit card transactions and reconcile, record payroll entries, etc.

2. What you won't do for the client. For example a clause I always include is that we are not CPAs and do not prepare financial statements. The reports we prepare are for internal management purposes only.

3. What you will need from the client and when. For example, access to their QuickBooks file, bills and bank statements and other material pertinent to perform the work.

4. When you will provide the services. Whether a project or ongoing services, I always set an expectation of when we will work on the client's books and when the material to work on their books is needed by. I also include a statement giving us the right to terminate our agreement if the material needed is not received when needed.

5. Services outside the scope of this agreement. In every agreement, I include a paragraph titled "Request for Additional Services" which lets the client know that they can request any of our other services to be outlined in a separate engagement letter.

6. Fees. Don't forget to include a discussion of your rates, payment schedule, finance charges, interest, collections and attorney fees applicable if the account goes into collection.

7. Approval Signatures. At the end of each of my contracts I have a place for the client to sign and also for myself. It is important to have the contract signed by an owner or officer of the business.

8. Personal Guarantee Statement. Because we deal with a lot of small businesses, I request that each client sign a personal guarantee statement ensuring they will pay for our services personally in the event there is a problem with the business. If the client is not willing to sign a personal guarantee statement, they may not be the client you want to have.

Having contracts with your clients not only protects you and your company, but it can also help with collection issues as well. Be sure to look at the big picture when it comes to contracts. All new clients start out well, but they do not always stay that way.

By : Laurie_O'Neil

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