Too many freelancers rush to take a project on, thinking they can worry about the paperwork later. Never skip or delay the contract step. It could seriously disrupt your bank balance and with that your life. As a freelancer, without the security and protection of an employee status, you need to make sure that every piece of work, no matter how small, is covered by a written contract with your client.
Every contract template is different but the most adaptable form is one which consists of two parts. First being the standard conditions (liability, law and jurisdiction, effective date, payment terms, etc.) that set out the general terms of how you want to do business. With that you issue a schedule which outlines all the commercials including any agreed service levels. This is the part you can customise for each client.
There are plenty of online tools to help you create a basic legal contract. Some are free while others charge a small fee. It is worthwhile to consider the paid options as they are likely to be more up to date and in line with the latest legislation such as the ever changing data protection laws.
Unmet expectations
This is possibly the most common pitfall for freelancers – delivering a piece of work the client claims they did not commission or is unfit for purpose.
Spend enough time drafting the discussed scope of work and make sure you go through all the details with your client. Once verbally agreed, write it down and make it part of the schedule/service level agreement. Sometimes it is hard to be exact, especially if your work is of a creative nature, but you should still try to formalise it.
Scope creep
It happens time and time again that clients change their mind halfway through a project and try to squeeze in more work without paying anything extra for it. No doubt it happens to almost everyone, especially when starting freelancing.
Work in your contract rework charges right from the start. For example a writer might allow for one redraft to be included in the price and then specify an hourly charge for any further amendments.
Consider how you charge for your work and how you can make your contract to address future ad hoc charges.
Unpaid invoices
Without a contract it is very easy for your client to walk away without paying the bill. It will be on you to prove that there was an agreement in place, verbal or otherwise, for the work that you have done and should be reimbursed for.
Sometimes clients still won’t pay despite a contract in place but a written agreement gives you a much stronger position if you decide to formally pursue the debt.
Especially if your professional indemnity insurance includes cover for unpaid invoices. This cover extension is usually given subject to having a good chance of recourse which is what a written agreement will provide.
Unlimited liability
This is an element freelancers rarely consider when forming an agreement with a client. In fact plenty of client contracts across all industries omit this very important section. It is a mistake that could cost you all your bank balance.
Limitation of liability clause expresses the maximum amount either party will be able to recover from the other if something goes wrong. A good start is to limit your liability to the amount of fees payable under the contract but some clients might insist on a higher amount. If that is the case, make absolutely sure you have your freelancer insurance sorted.
No insurance cover
A very smart step to protect your bank balance is to have liability insurance for freelancers. However, without a client contract you are seriously weakening your chances of getting a claim paid if an unhappy client makes a financial demand against you – be it refusing to pay your invoice, asking for a refund or claiming compensation.
Some insurance providers insist that you always cover all work with a written contract. However, even if they don’t, by not having a contract with your client you are risking that after paying your claim, your insurers may refuse to insure you in the future.
“Have you ever had insurance cancelled or refused?” is a question asked every time you apply for any kind of insurance and you don’t want to be in a situation when you have to say “yes”.
Last but not least, a client signing a contract shows a strong intent. A commitment if you like to receive and pay for the services you have offered.
