Using Contracts to Define Client Relationships

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It is very important that all businesses use contracts when entering into any sort of business relationship with a client. This is not only a helpful thing to have, but it also helps to define the scope of work, price, and represents a culmination of negotiation between a business or service provider and a client. Once a contract is signed, the terms are legally binding. This means that any disputes that arise between both parties are governed by the terms of the contract that both parties agreed to and signed. With that in mind, here is how business owners and service providers can use contracts to better define their relationships with clients.

Using contract lifecycle management

All business relationships are governed by contracts. This includes renting an apartment for a set period of time or enrolling in a college or university course. However, contracts are a two-way street, and a good contract helps to both protect a business and protect a client as well.

That being said, the best way to track if a contract is actually working as intended is through contract lifecycle management. Using this process, you can track the terms of a project and see how they are performing relative to what you and your client hope to get out of the business relationship. For example, if you define work on a set per-project basis, but the job ends up taking a lot longer than you think it will, then you can keep this in mind for future contracts or a contract renegotiation. Doing this will help your business thrive and also help your clients get more out of the business relationship as well.

Contracts can help protect businesses
Some businesses or service providers never have issues with their clients. However, this lucky streak is not at all realistic. Instead, you need to make sure that you don’t rely on this level of confidence and instead actually create legal protections for the relationship. For example, a client may not be happy with the level of service they received and refuse to pay an invoice. A contract can govern terms for these and help you recover an unpaid or overdue invoice by an unhappy client.

If you are working for yourself, you may also be in a more vulnerable position though. Without the protection of a business entity, a contract is all you have. As such, it is very important to have a working contract that protects you. It will also help you to avoid things like excessive revisions and other unreasonable demands that a client might make – particularly if they decline to compensate you for these substantial changes.

Clients can also help protect the client

Business is a two-way street, and contracts also need to be beneficial to the client. They need to make sure that you deliver what is promised and set deadlines and KPIs to track the efficacy of the work. For one, having good contracts that also give protections to clients will increase the likelihood that clients actually sign. Because contracts are legally binding, clients will be very sensitive to signing them if they do not feel they are benefiting from them. As such, a contract that honors both the business and the client is essential to creating professionalism and inspiring confidence in clients to work with you. If your clients feel protected, they will be willing to go the extra mile and even refer extra business your way.

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