So you don’t get the importance of a contract?
Don’t worry you’re not alone. Lots of businesses start up without a contract. Here, I explain why you should start with and the importance of a contract.
Why does it all start with your contract? Lots of times recently, people have been asking me about the importance of contracts. Why they need a contract, how does a contract help them get paid, what are the key points to include in a contract, why should they have a contract, how will a contract benefit their customer?
Contracts are fundamental to you and your customer knowing exactly what they’re getting for their money, what you’re giving them for their money, when they will get product or service, how and when you expect to be paid and the consequences of them not paying.
A contract sets out from the beginning the expectations from both of you. A contract allows you to reinforce and restate the agreement on your invoices. A contract is an upfront acknowledgement for both of you that you’re entering into this agreement and you’re aware exactly what is needed.
If you don’t have a contract you’re leaving yourself open to interpretation. Interpretation leads to disputes, misunderstandings, confusion. If you want to avoid these three things then a contract is key and vital.
A contract doesn’t have to be nine pages long. It doesn’t even have to be three pages long. All it has to do is set out clearly what you’re providing, when you’re providing it and how they’ll be receiving it.
For you, it has to state what you expect to be paid, when you expect to paid, how you expect to be paid and what happens if the payment isn’t received. Contracts do not need to be any more complicated than that.
Have a look at your contract. Is it overly complicated? Is it written in plain English? Is it something Joe Public will be able to understand? Does it cover all of those points?
If the answer is yes. Fabulous. You’re in the minority of businesses. If the answer is no, think about reworking your contract. Get a contract in place and make sure you remove the ambiguity, uncertainty from the relationship you’ve got with your customer.