Contracts with customers

[Romore]

Is necessary to have a contract drawn up between you and your customer, for works say between £100-£5000. What is to say the people are definitely going to pay once the work is finished if there is no contract?

 

[Kernowman]

Yes it is very worthwhile creating a contract and it saves a lot of grief getting payment.

To ensure you get paid, all you have to do is to add a satisfaction section at the very bottom of the contract, so that when the work is completed you get your customer to sign it. It will contain the words like "I am satisfied the work has been completed in accordance with the schedule/contract". You make your own wording up.

The contract should be a two part carboned sheet so both parties have the same information before them right at the start and the end of the work.

I fail to see how any customer can refuse to pay up once they have signed that document and if they don't, I see even less reason for a judge to see otherwise if a dispute goes to court.

 

[Romore]

So they would sign the contract twice?- once before the work is done, to say I will complete the works for such and such price, and then once it is completed, to say they are happy?

 

[Kernowman]

So they would sign the contract twice?- once before the work is done, to say I will complete the works for such and such price, and then once it is completed, to say they are happy?

You would also have to include a Schedule of all the work to be carried out BEFORE they sign the first time. This is to stop any "extras" being thrown in without being paid for, so in that case I would make up a second schedule and contract for any additional work so it does not dilute the clarity and power of the original schedule and contract.

When the original contract and "extras" contracts are both completed, the customer signs both.

Sounds complicated, but litigation is even more complicated and expensive.

 

[Romore]

Would you need to go to this level even if the job was a short duration of say one day?

 

[E Storey]

Would you need to go to this level even if the job was a short duration of say one day?

By agreeing to do the work you already do have a contracy - a verbal one.

By submiting an estimate with a description of what work is to be done, and at what price you give yourself a bit more support should there be problems in paying later on. this in itself does not have to be signed, by allowing you to do the work the customer has shown they do accept the terms you have proposed.

for much larger jobs, i would deffinately type up a standard contract, with a desciption of works, prices, and payment terms.

 

[Kernowman]

Would you need to go to this level even if the job was a short duration of say one day?

Even on a straightforward one day job it can go very pear shaped and here is a good example of what can go wrong without due diligence:

http://www.ukbusinessforums.co.uk/forums/showthread.php?t=172184

A written agreement can also be very useful in keeping track of your work carried out if ever the tax man gets funny about the work you have done.

 

[longleaf1]

Agree with E Storey - submit an estimate and get a purchase order as per your estimate for the works - from businesses anyway, less harsh than a contract but ultimately is the same sort of thing, when you leave site, get the manager to sign off your work. Any extras need doing, agree a price and get a PO, i find this solves much less hassle when accounts get your invoice, it tallies up with the PO, gets entered and you get paid!

 

[Romore]

What about residential customers?, these are the ones i'm worried about?.

 

[Kernowman]

What about residential customers?, these are the ones i'm worried about?.

Especially so with residential customers who have no idea what your craft is and even more so the WORTH of your craft, hence why the "something for nothing" people are the biggest pain of all in squabbling about money.

Creating a contract isn't as difficult as you might think and it doesn't need a lawyer to convert plain english into legalise gibberish to make it both fair to you AND the customer, yet still be enforceable. Once that has been created, the your local printer will happliy print them in two part carboned forms and away you go.

 

[estwig]

If you don't want to win any work, then yea go for it, slap a contract in front of the punter! A nice thick juicy one with lots of small print to cover your arse is best.

Submit an estimate, never a quote, take a deposit up front, a stage payment when you turn up on the day with tools and men as promised, another stage payment half way through (no. of stage payments depends on the size of the job), then leave the punter to give you 15% on completion. This makes them think they have control, never offer terms for the final payment.

Above all trust your judgement, if your 'spidy senses' tell you their 'rong 'ums, they probably are, sling a web and shoot off!!

 

[Tw Installations]

Is necessary to have a contract drawn up between you and your customer, for works say between £100-£5000. What is to say the people are definitely going to pay once the work is finished if there is no contract?

I am probably going to get shot down in flames for this one but I am not sure its a necessity.

I do jobs at high values between 5k-30k and I don't have any contracts, I do however have a very nice quotation which details all the work we will carry out and also the exact specification and model numbers of the goods we are supplying etc.

As someone said this in itself if a type of contract, On the quotation I give the price, a proposed start date for the work and our payment terms.

Thats it, no small print etc.

Personally, I think people are just looking for someone they can trust.

I looked at another companies contract the other day and the amount of ******** that was on it was unbelievable.

It said things, like "if we turn up to do the work and there is no one there to let us into the property then the client will be charged xxxx for every hour of our time wasted"

"If there is any damaged goods then we must be notified immediately, if told after 24 hours then no refund will be given " etc,etc

This is very off putting for a lot of people and I myself would be put off by a contract like this so personally I would avoid going into too much small print

Tommy

 

[Kernowman]

A lot of people think that a Contract must be filled from top to bottom with legal terms by the bucketful, full of clauses and conditions.

All you need is a simple document, clearly worded in plain English that protects you from the customer and vice versa, so it has mutual benefits for you both.

Look at it from the customer's perspective as well as your own and it is that which earn you respect and trust - two way.

 

[longleaf1]

Well if your going to get shot down me too

This is pretty much the same as we do!

Like estwig said, you don't want to scare off your customers...

 

[stone21]

it is necessary to have a contract with details about delivey and payment.

 

[longleaf1]

it is necessary to have a contract with details about delivey and payment.

Yes but you can include the same terms on your quote, get a PO as per the quote, Order ack back with terms yet you don't have to use that nasty word 'contract' thats puts people off!

 

[stone21]

Yes but you can include the same terms on your quote, get a PO as per the quote, Order ack back with terms yet you don't have to use that nasty word 'contract' thats puts people off!

You are right .
In fact , sometimes we write nearly all delivery terms and payment terms in quotation , if the enquiry about products from buyers are very clear . Some buyers prefer to PO , instead of contract .

 

[linhnguyen210]

its worth the contract to be honest

 

[maxine]

This is a bit one sided in my opinion. Don't forget that residential customers will try on occasions to claim damages and quite often these allegations can by far outweigh the profit on jobs. So this is where the "arse covering" comes in.

Also do not confuse willingness to pay with ability to pay. You may have a quote/estimate/proposal produced with strict criteria on what is being done, by when, to what standard, with what materials etc but don't get this confused with whether someone can pay for the work.

This is where staged payments come in as this is related to how much credit risk, as well as satisfaction for the work, that you are prepared to take per job.

In some cases this may be zero and you always ask for payment up front (either the whole job or each stage) or you may agree amounts of anywhere between £100-£1000-£10,000 depending on what you feel comfortable with. To arrive at this value just ask yourself how much you could afford to lose through bad debt without your business suffering too much.

Contracts can be verbal but way more difficult to enforce than if they are written in some format, either by email, text, carbon order forms, etc. It need not be a complicated or off putting format.

Yes people want someone they can trust but some kind of formality can help build that trust.