Professional Service Contracts
Richmond, Virginia Attorney
Nothing puts a crimp in your cash flow quite like a slow-paying client. When unpaid invoices drift for weeks or months through a client’s approval and payment process, your ability to concentrate on what you do best–namely, providing professional service to people who truly need your expertise–suffers. While you know you need to dedicate all of your effort and energy to providing current business with the best service possible, at least some part of you will be thinking about resolving those mounting balances in your accounts receivable line.
The solution, of course, is getting clients to pay faster. To make that happen, there is simply no better incentive than having a solid contract in place before beginning each new project. As you write your standard professional services contract, be sure to include the following points. When you have a draft ready, ask an attorney review the document before using it with clients.
Clear Description of the Work
Once you and your client have agreed on the specifications for the work you will perform, put the description in writing. Not only will this provide you with a standard by which you can declare the job complete and ready to bill, but it will provide a clear, objective measurement that can go a long way towards avoiding litigation.
Unfortunately, not all business relationships work out. If falling out with a client leaves you with a long list of hours worked, but nothing you can bill, you could be forced to declare the job a total loss. To keep these situations at bay, be sure that your standard contract states what will happen if you are terminated for any reason. Will partial payment be due? Who owns the rights to the deliverables you have completed? Answer these questions before work begins.
Require Disputes in Timely, Written Form
If your client has a problem with the work you have performed, the time to find out about it is now. Waiting until later will make the problem more difficult to fix, increase the likelihood of refusal to pay, and potentially cause irreparable harm to your business relationship. Include a statement in your work agreement that requires clients to immediately bring any dispute to your attention in writing. That way, you can fix problems where possible and have a written record of the exact nature of the complaint to provide to your attorney if the need arises.
Address Attorney Fees for Collection
No one wants an invoice to go to collection, but when it does happen, be sure you can pass the cost of collection on to the delinquent client. If your work agreement states that the client is responsible for covering the collection costs, not only will you protect your own bottom line, but you will give clients something to think about before they let an invoice advance to this unfortunate stage.
Let Interest Accrue
Finally, remember that clients who let bills go unpaid cost you money. Negotiating with them and administering their accounts translates into unbillable hours worked. To compensate for these losses, be sure that your standard work agreement stipulates that late payments will accrue interest after 30 days. In addition to recouping some of the money slow-paying clients might have cost you, this practice will also provide them with an incentive for ensuring that payments are sent in a timely manner.