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6 Tips for Smooth Contract Negotiations
Business

6 Tips for Smooth Contract Negotiations

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Back to all posts
6 Tips for Smooth Contract Negotiations
Business

6 Tips for Smooth Contract Negotiations

Having clearly set terms when finalizing scope of work is critical in creating a positive working relationship with your client. It's also absolutely essential to ensure that you keep control of your cash flow and maintain a regular schedule of payments into your business.

Whether you are a designer, developer, or some other project-based business model, communication is key. Below are some helpful tips to ensure everyone involved comes away informed.

Don’t assume.

Just because you have a great relationship with a client, don’t presume they understand you implicitly on every project. Even the smallest misunderstanding can cause big problems later on. Miscommunication is very common, and can destroy relationships quickly.

Always over communicate to ensure everyone understands expectations, if it’s the first time or the fortieth. Proper documentation of all aspects of the job is critical.

Set an initial payment up front.

Many contracts begin with a payment to ensure the client is serious about the work that’s about to begin. This shows respect for your initial investment of time, effort, and dedication to the project and will help you fund the start of the work. It's also critical to maintain healthy cash flow in your business.

Each client and every project and is different so request a reasonable initial payment to cover the scope of work.

Get picky about the details.

Even if your client isn't overly concerned about the details, you need to track everything carefully and set out the terms.Here are some important questions to ask: What entails completion? What percentage of completion at each stage of the project is sufficient to be invoiced? What’s your policy on change orders? What is a reasonable time frame to expect changes to be completed? If the final project is late or still in progress by this time, what are the options? At what points will sign-off be necessary or can you invoice based on delivery?

Sign offs at every stage can cause significant delays which can have impacts on every part of the project.

Establish timelines for approvals.

If the client does require approval, make sure you have a specific time frame for them to sign off. Don’t let each stage bleed into weeks or longer to continue making progress. Also establish what consists of an approval. Is it a signed document? An email by a certain person in charge of communicating with you or your team?

Always have a paper trail.

Arrange for progress payments.

Your contract should always detail regular instalments to help with your cash flow and keep work running on time. If you wait until the end to receive final payment upon delivery, there’s a risk that the client could delay pending approval or there could be challenges deciding on level of completion, and that can impact your business finances significantly.

Have a strategy for delayed payments.

Whether a client payment is delayed for legitimate reasons or not, it’s best to have the client sign off on a course of action when payments aren’t received on time. This will ensure that you don’t waste time on producing goods or services that aren’t paid for and the client isn’t upset when the project is paused. It all comes down to good communication.

Having a project run smoothly from start to finish often comes down to clear communication, documentation and paying attention to the details. Laying down a clear and solid foundation in the terms of a contract is critical for a successful project and customer relationship.

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