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The Quarterly Contract Audit That Every Service Provider Needs To Do

The Quarterly Contract Audit That Every Service Provider Needs To Do

As a lawyer who has spent the last 13 years suing companies and defending them, you can imagine how much I preach the importance of having proper legal documentation set up to business owners and service providers for success. 

And I know… you might be thinking that sounds like a total snooze fest, but I’m not like a regular lawyer – I’m a cool lawyer and I’m ultimately here to make the legal side of your business less boring and less confusing so you can confidently do business WITHOUT getting sued!

Sound like a plan? Good, keep reading! ⬇️

As a cool lawyer, I spend most of my days educating on things like privacy policies, terms and conditions, what you can and cannot trademark and all of the other intricacies that come with contracts in business. 

I believe that having correct contracts is an absolute necessity in your business for a variety of reasons and failing to set up legit contracts can result in a lot of wasted time and money.

While contracts might appear to be stuffy legal documents that you don’t want to fool with, contracts are actually a primary backbone of any successful business because they serve as vital agreements between you and the people you work with.

At their core, contracts establish expectations, responsibilities and provide legit legal protection so you can avoid or easily resolve any legal trouble that may come up during a working relationship.

But there’s something I want you to know: contracts aren’t something that you simply set and forget. They aren’t something that you create at the beginning of your business and never re-visit.

This is a mistake that I see business owners and service providers making ALL the time and failing to update your contracts as your business changes can lead to some major legal headaches down the road. 

In order for your contracts to continue to serve and protect you and your business, you want to make sure that you’re doing a quarterly contract audit to ensure that everything is up to date and legally backed. 

In this blog post, we’ll dive into 5 main things to check for in your contracts every quarter to ensure that your business is legally covered and your clients have clear expectations during your partnership together.

5 Things To Update In Your Contracts Every Quarter

  1. Scope of Work

In a contract, the scope of work (SOW) is a detailed description of the tasks, responsibilities, deliverables and objectives that you as a service provider will provide to your client.

The SOW is a critical component of your contracts because it clearly defines the work and deliverables that you promise and it sets clear expectations for your client.

Key elements typically included in the scope of work section of your contract are the description of the work, the objectives and goals, the deliverables your client can expect to receive and the timeline with milestones or deadlines related to the project at hand.

As your business grows and expands, it’s natural for your scope of work to change as well!

This is why conducting a contract audit to ensure that your scope of work accurately reflects your services is so crucial. 

  1. Payment Terms

The payment terms portion of your contract outlines the details related to how and when a client will pay you for the services you provide.

I knowwww you’re not out here working for free (and if you are, please stop!), so you want to make sure your payment terms are clear to avoid any confusion. 💸

This section is crucial as it helps establish a clear understanding between both parties regarding financial matters, ensuring that both you and your client are on the same page regarding payment obligations.

It’s very common, as a service provider, for your rates to change as your business changes. 

This is great and I’m all for raising your prices, but make sure that you update your contracts when you do so and provide very clear communication for your clients when and if these changes take place and when they will take effect.

  1. Deadlines and Deliverables

Information for deadlines and deliverables typically falls under the scope of work category that I mentioned above, but both of these things are too important not to talk about on their own. 

As your business grows, it's likely that your timeline structure for deliverables will change. When or if this happens, make sure you review your contract to ensure that the information is updated so that your clients know exactly what to expect. 

It’s also important to note that the actual deliverables for a certain service you offer may change as well over the course of your business.

For example, let’s say you’re a social media manager and you started off with a service that includes 1 Instagram post per day, 3 Instagram stories per day and 1 Instagram Reel per week.

As time goes on, you might realize that you need to tweak the offerings that come with that particular service so that you can easily scale. 

You’re allowed to do this (after all, it’s your business right?!), but you want to make sure that the deliverables are extremely clear, not only in your contracts, but also in any place that your services are listed. 

The reason this matters so much is because you might have a potential client that’s been following your business for years and they’ve grown accustomed to the previous service that you offer. 

When they inquire about finally becoming a client, they may expect the original service because that’s what they’ve been used to seeing for so long. 

If your contract isn’t updated to reflect your new service, you may find yourself in a sticky situation… which can be completely avoided by taking the time each quarter to update your contracts accordingly!

  1. Intellectual Property

Intellectual property (IP) in a contract refers to the legal rights and protections associated with intangible creations, such as inventions, literary and artistic works, symbols, names, images, designs, etc.

Intellectual property rights are essential for protecting the ownership and exclusive use of any intangible assets that your business might provide to a client!

In a contract, the intellectual property section typically addresses the ownership, use, and licensing of any IP that may be created, used or exchanged during the course of the working relationship.

This section is crucial, especially in contracts where one party is providing services, creating original works or developing new products for the other party.

As a practicing lawyer that reviews LOTS of contracts, I often see business owners missing this section. 

So, to avoid any IP disputes in the future, check your contracts and make sure this section is included!

  1. Dispute Resolution

The dispute resolution section of a contract outlines the procedures and methods that the parties involved in the contract must follow to resolve any disagreements, conflicts or disputes that may arise during the course of the working relationship.

This section is essential to provide a framework for handling potential disputes in a structured and organized manner, helping to avoid costly litigation and maintain a positive working relationship between you as the service provider and your clients.

It's important to note that the specific dispute resolution procedures can vary significantly from one contract to another and this section should be defined in a way that is specific to YOUR business!

As a service provider, you’re allowed to set the ground rules and tailor the dispute resolution to fit the nature of your business and require your preferences for handling potential disputes.

If the process for this ever changes (which it may as your business grows), make sure that your contracts reflect those changes so that your client knows what process to follow if or when they need to.

Overall, it’s not only important to HAVE proper contracts for your business (that’s the first step!), but also to make sure they’re updated as your business grows and evolves in order to mitigate risk, stay legally compliant and continue to provide utmost clarity for your clients. 

If you already have contracts set up in your business, but you haven’t looked at them since you started your business, take this as your sign to put “update contracts” on your to-do list this week and ACTUALLY do it.

If you’ve yet to set up contracts in your business, I’m going to look the other way for .5 seconds and point you in the direction of everything you need to set up legally legit contracts in your biz so you can protect yourself as soon as today!

If you’re more of a DIY’er and don’t want to purchase a super simple, fill in the blank contract template for your industry specifically, you do you I guess… but make sure you follow these Do’s and Don'ts!

Here’s to doing business with clarity and confidence, my friend. 🙌🏻

P.S. Not sure what exactly needs to be included in your client contracts? Refer to this blog post and scroll to the “Written Agreements” section for a full list!