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4 Tips For Creating An Ideal Service Agreement

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4 Tips For Creating An Ideal Service Agreement

Working as a freelancer or having a service-providing business is a great way of generating income. However, this form of self-employment comes with its fair share of risks. For example, a client can refuse to pay you for the work done simply because part of the project didn’t go according to their wishes. Such issues occur even to the most experienced in their fields.

A client relationship breakdown generally stems from poor communication, which may result in mismatched expectations. As such, it’s important to ensure that you and your client are on the same page before starting any project together. Fortunately, there are ways to protect yourself and ensure that your services are remunerated.

That’s where a service agreement comes into play. So, what is it, and how can you create one that works for your business? This article discusses all you need to know about this important but all too often overlooked, business document.

 

What is a service agreement?

A service agreement is a contract signed by two parties––a supplier and client––with the supplier agreeing to provide a given service to the client in exchange for payment. The information stipulated in the document is legally binding. So, both parties are required to read through the agreement together before putting down their signatures to avoid unnecessary issues in the future. (3)

The content may vary depending on the relationship between the two parties and the type of service being offered. Once you’ve created one that fits your needs and those of your client, you can send it to the client and wait for their response. 

 

4 Tips For Creating An Ideal Service Agreement

Tips for creating a service agreement

If you have lots of clients, it’s recommended that you customize your service agreements accordingly. This can require a certain investment of time, especially if you are busy trying to run all other pressing aspects of your business, however, look into whether technology can help you. 

Often business management suites come with the functionality to help you do this. Take for example an HVAC contractor business (heating, ventilation and air conditioning service). Research whether you can find a reputable business app like the one developed by Jobber. Specialist smart software such as this can be very clever at automating your routine tasks and operations and will assist you in creating bespoke yet consistent and professional service agreements that can be saved in each client folder. 

 

Additional points to consider: 

  • Get it in writing

An ideal service agreement should always be in written form. You can strike a deal verbally, but that may not be legally binding because there’s no proof that both parties are on the same page. However, writing it down ensures that you and the client have a clear understanding, as it can be shown by your signatures. (1)

 

  • Your service delivery schedule

Not everyone has the same work schedule. It’s possible to communicate to your client about this verbally, but that might not be the best way of going about it. To avoid unnecessary disagreements in the future, it’s recommended that you include your working hours in the agreement. This way, the client will agree to your proposal knowing full well that there are some hours and days of the week that you won’t be available. 

Ensure that you are following best practices with how you put your quotes together. Make sure that whatever you’re quoting for in this section of your service agreement corresponds with your job quotation. Although a job quotation isn’t legally binding, you wouldn’t want to have contradictory statements in two of your documents.  

  • Include your billing structure

Another important factor that must be included in the service agreement is your payment policy. Which terms are you willing to work with? How many days after all the services have been delivered do you expect to be paid? Make sure your billing structure answers these and any other relevant questions that the client might have before you commence the project. 

You should also mention how you would wish to be paid. Many businesses today accept digital payments. If yours is one of them, be sure to state that you can work with cashless modes of payment and list any other alternative methods. Doing so will help you avoid any payment disputes in the future.

  • Contract termination

Every contract eventually comes to an end. It’s your job to stipulate how you’d like this process to take place. The agreement should clarify if the parties involved can only terminate the contract when it’s breached or they can do so at any time. If the latter is true, then it’s important to also mention that the breaching parties should receive notice of their wrong deeds. This way, the termination can be done smoothly without anyone feeling that they were treated unfairly. (2)

 

Conclusion

The benefits of contracts in businesses can’t be overstated. As such, every supplier-client relationship must have a service agreement. It stipulates the important policies that both parties must keep in mind while working together. 

As the service provider, you can create this document and let your clients sign once they’ve read through all the information. Some important factors to include in your service agreement are the billing structure, contract termination process, and the service delivery schedule.

 

References 

  1. “The Importance Of A Written Agreement When Engaging Independent Contractor”, Source: https://www.forbes.com/sites/forbeshumanresourcescouncil/2018/07/02/the-importance-of-a-written-agreement-when-engaging-independent-contractors/?sh=7bf72ba9d9ef
  2. “5 Ways To Terminate A Contract”, Source: https://smallbusiness.chron.com/5-ways-terminate-contract-16020.html
  3. “What Is A Service Agreement?”, Source: https://www.dundaslawyers.com.au/what-is-a-services-agreement/#:~:text=A%20services%20agreement%2C%20also%20known,Client)%20in%20exchange%20for%20remuneration.
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