Why Should You Have a Contract?

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ContractsLast week ended with a distasteful task which every business owner faces at some point.  I am proceeding with collections on a client.  It has gone beyond collection letters and other procedures.  I have been forced to take it to Small Claims Court.

I have  been through this once  before.  In that instance, I filed the papers and proceeded myself.  The case was found in my favour but the “client” disappeared and although I had paid court costs, I was unable to collect.  That’s when I started submitting a contract to be signed by each new client and myself.  And such was the case with this new Small Claims Court Case.  A contract had been signed and agreed upon but the client refused to pay anyway.  Now we have gone beyond the “settlement” step to an actual court case, a very lengthy and costly procedure.

In almost every small business, especially in the Virtual Assistant industry, a contract is a mandatory step.  Many contract templates are available on many Virtual Assistant Groups websites.  But since it is a legal document and has to be edited to reflect your individual business practices and procedures, I recommend you have a lawyer  review it to make sure it reflects exactly what points you need to have covered.

Or see a paralegal (which is what I did).  When you have an initial meet with new clients, whether it be for on-going tasks or a project, and whether it is an “in person” meet or a telephone consultation, you must clarify the customers needs and expectations as well as your expectations and clarification of the services/goods you are providing.  The contract clarifies that you and the client “are on the same page”.

The contract should address these key points specifically:

  • Hours that will be needed to provide the service
  • The cost involved as well as an indication of the taxes that will be added.
  • Any discounts/adjustments to the total due.
  • Method of payment and when required.
  • Timelines for the beginning of each task/service and the expected date of completion.
  • A description of every task/service that is required by the client.
  • A non-disclosure section that deals with the clients privacy.
  • Any special requirements of the client such as reports, status updates, consultation calls, etc.
  • Terms of employment such as termination of the project/services by either the client or yourself, e.g. do they require notice or do you and how long,  Will there be penalties if the contract is terminated before the end date specified.

Once you have the client sign the contract, sign it yourself and return one to the client and one for yourself.

If, at any time, the client’s requirements change, submit an amended contract to reflect the changes and the costs involved and have both your signature and the client’s on the amended document with a copy to each of you.

By following these procedures, you are proceeding into a professional agreement with the client and, as well, will clearly define the terms, expectations and costs so no miscommunications can occur.  If the client is reluctant to enter into a professional agreement, you can be pretty sure that there will be further problems down the road and you may have difficulties with receiving payment for work done.

We are having a bone chilling week of weather here in South Central Ontario.  I am so looking forward to Spring approaching.  Have a good week, everyone!

Diane Coville


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