I’m using my extra time at home cleaning up my business a little bit at a time. But there’s something I’ve been avoiding like the plague: Re-doing my contracts (because uuughhhh).
If you’re anything like me, “Legal Things” fall into the category of “sh*t I really really don’t want to have to think about”. But this is important- what I’m sharing here can save you a lot of time, money, and headaches, so LISTEN UP!
Contracts are like first-aid kits. You kinda forget about them until it’s REALLY REALLY important that you have one.
My friend Nicole Swartz is the lawyer we all wish we had. She’s somewhere between CJ Cregg (where my “West Wing” fans at?!) and Elle Woods; you totally respect her, she’s clearly incredibly smart, but you could also like, get a mani-pedi together, ya know?
Nicole recently sent out an email about issues that are coming up for a lot of businesses and entrepreneurs right now related to CONTRACTS.
She kindly gave me permission to share her advice on my blog…
Here are her most frequently asked questions about Clients & Contracts during Covid-19 (& what to do about it!)
We’re getting so many questions about clients + contracts right now, so here’s a roundup of our best advice:
If You Have a Contract
Start by reading it.
I know it’s not the most fun way to spend 20 minutes, but you need to know what’s in there.
If you’ve been stockpiling alcohol along with your quarantine supplies, this is the time to break it out! It makes reading through contract clauses a lot easier.
Here’s what you’re looking for:
Read the cancellation clause in your contract.
How can the other party cancel?
What do they need to do?
Is there a time period?
What if the work has already started?
If you absolutely need to, how can you cancel? What do you need to do?
Make sure you know the rules around all this.
Force Majuere Clause
Your contract might not have one of these and that’s okay – They’re not right for all contracts. If your contract has this clause, it will say “Force Majuere” in the heading.
This clause applies when the contract work is impossible to do.
“Impossible” means there’s absolutely no way to complete the work, like because of a travel ban, a ban on in-person events, closure of restaurants, etc. It has to actually be impossible.
If you have a force majuere clause that applies and the work is actually impossible to do, then the contract doesn’t have to be completed. In that case, there are no fees or damages.
If You Don’t Have a Contract
Take a deep breath.
You’re probably still okay.
You might not be paid the full amount. It might be more expensive to collect. It might take longer to be paid.
But if you’ve done work for someone already, you’ll probably still be paid for it.
The best thing you can do is document everything. Take screenshots of Instagram DMs and WhatsApp messages. Save emails. I’d send an email confirming the work and payment details right now.
There are still other issues that could be a problem, like whether they can cancel and when they can cancel. There’s not much you can do about these without a contract or some sort of written agreement on these terms.
You could send a contract out now. You could complete the work as soon as possible. Or you could hope they don’t cancel.
Here’s what to do next…
Reach out to clients
First, reach out to your clients and check in.
You want to know ahead of time if they’re struggling with something because 1. this is the time to help, and 2. you want to prevent future problems.
This is especially true if you have one or two large clients or suppliers.
Talk about how you’re handling the situation, precautions that you’re taking, and ask how you can help.
Stay on Top of Missed Payments
Know when payment deadlines are coming up.
If a late payment happens, the best thing you can do is reach out early. The earlier you send an email to check in, the more likely they are to pay.
We send an email offering to break the missed payment into weekly payments and say that we’ll follow up with a call in a few days.
If you wait a month to reach out, you’re probably not getting paid.
How to Handle Extensions + Late Fee Waivers
You may want to extend payment deadlines, change a payment plan, or waive late fees + interest. There are extenuating circumstances and some clients might need help.
If you decide to offer those options to your clients, make sure you send an email that this is a one-time change. You need to say that and it needs to be in writing.
Otherwise, that change can be permanent.
That means you could waive your ability to charge late fees in the future.
Document it All
Keep records of everything that happens right now.
Cancelled events. Cancelled clients. Any changes that happen.
You may need this for lawsuits or government relief at some point.
We don’t know exactly how the government will help right now. It could be tax breaks. It could be small business loans.
Either way, you’ll need documentation that your business was harmed during this time.