Customer contracts can literally make the difference between you getting paid and getting stiffed. If I had a dollar for every time I heard a client tell me that they did not get paid after being a nice guy and extending credit on a handshake only.

Customer contracts do not have to be complicated.

Simple terms communicated to a customer and an acknowledgement from customer that the agree and accept those terms is better than nothing. If you cannot take a few minutes to send a quick email, perhaps you should take a time management class!

Customer must agree to terms in advance.

For example, if you do not have a written agreement regarding finance charges on late payments, you cannot charge them. The same holds true for costs of collection. Clients get mad at me when I tell them I cannot add my fee onto to the debt owed if there is no contract. I hate it when customers get mad at me, but the law is the law.  Simply listing finance charges after the fact on your invoice does not cut them.

Customer contracts should be in writing.

Oral contracts are legal in most states, but an oral contract leaves terms and conditions open to interpretation, and hence, open to dispute.

If your customer is a business, attempt to obtain a personal guarantee, which makes the business owner liable for the debt if the business cannot pay.

Think about it for a minute – would your bank loan you money without a pile of paperwork? Think like a bank!

Many small business owners hesitate to have their customers sign a contract, believing that it starts a business relationship off on a negative note. Nothing could be further from the truth. Clearly communicating terms and conditions in writing, and making sure your customer agrees to them will communicate your commitment to the customer and to a long-term business relationship.

What’s that I hear? Too busy? Can’t afford the time? The reality is that you cannot afford not to.