7 Things You Didn't Know You Could Put in Your Contracts

I'll say it again and again: your contracts support your boundaries. But maybe that feels a little wishy-washy. This episode covers 7 concrete pieces you can add to your contracts to make your life easier when dealing with clients.

Did you have these already? Are you going to add any? Send me a DM or share this episode on your IG story and tag me to let me know! @artfulcontract

Key Takeaways

• You're the business owner - you make the rules. Your contracts can basically say whatever you want as long as it's not criminal
• Yes, you can charge interest on late payments and on payment plans. See bullet point 1 above
• Add a testimonial release and/or portfolio release to make sure you can use all those glowing Slack messages from happy clients and screenshots of your work in your marketing
• My #1 tip to make sure you get paid: take (at least some) money up front!

Resources Mentioned

• Download the 9-Step Checklist
• Watch the free masterclass
• Follow Amy on Instagram @artfulcontracts

Next Steps

Thank you so much for listening! If you enjoyed this episode, please reach out and let me know by sending me a DM on Instagram @artfulcontracts

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Episode Transcript

I say it all the time. Your contracts back up your boundaries if you just get it in writing. But maybe that sounds a little bit vague. So today we're talking about seven things that you can put in your contracts to support your boundaries that you might not have thought about.

Hey, I'm Amy Nessheim, licensed attorney for online business owners and founder of my own business, Artful Contracts. You're listening to Legal Made Easy, the show that makes the legal aspects of online business easy to understand and implement so you can grow your business with confidence knowing you've got it all covered. Let's dive in.

We're just gonna dive right into this because it's really as simple as it sounds. We're gonna talk about seven clauses or rules that you can put in your contracts that are really just gonna make your life easier when you're dealing with your clients. And these are really in no particular order, or maybe just the order that they came to my brain. Some of them might feel good, some of them might reflect what you've experienced in the past, some of them might not. Take it or leave it as you wish.

Alright, number one. I know I just said these are no particular order, but this one is my favorite, so it's going first. Get your payment up front. You're allowed to do this. You can decide on a fee, a flat, a flat amount for your whole project and charge it up front. You can do that. I know there are lots of service providers who are like, duh, I already do that. But I know I also know that there are a lot of newbies who are really scared of saying the price and saying, yep, due upon receipt of invoice, due upon signing the contract, pay me and then I'll get to work.

And yeah, there are gonna be some clients who don't do who won't do that. They've been burned before and they're like, no, I want to see the results before you get any payment. But I just wanted to hand you a permission slip, get payment up front. And this can also just be a portion of the contract, it doesn't have to be the whole thing.

At a minimum, get a deposit. Really, there aren't gonna be, if there's a client who says, no, I don't even want to give you a deposit, I don't think you would want to work with them anyway. So at a minimum, get a deposit. If you still charge hourly, think about building out some retainers, think about building out some flat fee projects. But if that's your model, if you charge hourly, you can get a retainer and bill against it. This is well, that's what lawyers do, right? Get the money up front and then work the hours.

And that way, if your client disappears, at least you have some payment for the work that you've put into it up to that point. And that can be really whatever you want. You can charge the whole thing up front, 50-50, three monthly instalments, you know, whatever makes sense for you, but just get something upon signing the contract.

Number two, late fees. You can build in late fees if your client doesn't pay on time. And this can be whatever you want. Generally, these things are unregulated. Some states have a max on the percentage amount of a late fee you can charge, but most places don't. It can be a flat fee, it can be a percentage, a daily amount, a weekly amount.

If you're looking for guidance, a general rule is about 12% annually. So what that looks like is for every 30 days that the payment is late, there's 1% fee, because that's 12% per year divided by 12 months, and then it compounds. So if they don't pay in that first month, there's another month goes by, there's another 1% interest. If you don't want to deal with the math of percentages, you can also just do a flat fee, like you know, $50 for every week that it's late. Just make sure that you're not really going much beyond the 12% like overall interest rate. The idea is to make it hurt a little bit when the client misses the payment, right? And give you a little bit of compensation for having to chase them down and for losing losing out on that money. It's kind of like interest on a loan because if they missed a payment, that means they're holding on to money that legally belongs to you and you're charging interest on them holding on to it.

Number three is language around clients who ghost. There's a couple options for this, but if you have a client who disappears, you're gonna want to have it in your contract, what you're allowed to do with their project and what happens. So a good one is automatic cancellation. You can say that if they don't get back to you within X time frame after you request something, and maybe build in like three reminders or something, then your contract is automatically terminated. You have no further obligation to work with that client.

Maybe you send them drafts, maybe you don't, and maybe all your payments come due. Or at a minimum, you send one final invoice for whatever you've worked on so far. If a client totally goes to you, you're allowed to cancel the contract. You just have to write it in there up front. Now, another option that I've seen some people use is just taking them off a schedule and charging a restart fee. So if they don't get back to you, again, make sure you're clear on the number of days that not getting back to you is. So don't just say within a reasonable time frame, put it like 14, 30 days, something like that. And then you have the right to take them off of your schedule, take other clients, and you don't guarantee that you'll have space when they come back. And if they do come back, they have to pay X amount to restart the project, a restart fee.

This just saves your sanity and your schedule and your planning for other clients. Number four is refund policies. Have one. I don't really care what it is, but have one. Make it explicit and make it clear. This can be no refunds at all. If that's the case, fine, write it in there and you're good. It might be a partial refund. It might be date-based. So you can get a refund within the first five days. Make it real quick, real quick, like just prevents um the buyer's remorse type of thing. Or it can be, you know, if you request a refund before X date, before we're three months in of a six-month project, you get a 50% refund or a partial refund of some kind. You can make it as complicated or as simple as you want. Just again, make it really explicit.

Now, another thing I've actually, one of my students in Cover Assets asked me about is she wanted a no refunds policy, but she also wanted the option of like firing a client who is a bad fit and giving them a refund. Or, and she didn't mean fire the client. She was asking about if the client says, Yeah, you're not, you're just not the person to work with me because she was a coach and you want that to be a good fit, right? So if the client says, you know what, I was really fully in on this, I really wanted to work with you, but we're just really not a good personality fit. She wanted the ability to give them a refund. And so you can build in discretionary refunds too. So basically, no refunds allowed except under your discretion. You just have to be careful not to use that in a discriminatory way. Um, but I don't think you would do that anyway.

All right, number five is interest on payment plans. Yes, you can put interest in your payment plans. If you have a pay in full option, your payment plan option can cost more. And the reason for that is you're basically giving a loan, right? You're giving your client flexibility and that's gonna cost money. You are also taking on the risk that the client is going to fail on those payments, and so you're charging for you taking on that risk.

It also just costs more to have more volume of transactions in your business. There's more payment processing fees involved in that. So, all of these are reasons to put interest in your payment plans. It is a personal choice. I know there are some people who feel strongly that people shouldn't be punished for not having money up front, which yes, totally makes sense. So you don't have to do this. It's just I wanted you to know that you're allowed. It's an option that you have.

Comes back to this. You're the business owner, you make the rules. And that's the case in the majority. There's so many situations where people come to me and say, am I allowed to do this? And I'm like, yeah, unless it's like criminal, our industry is largely unregulated. So go for it. Now, again, just like the percentage rates for late fees, you don't want to get too crazy on this.

I would say max out at 20% interest. If you go too crazy, no, just no one's gonna choose the payment plan anyway. Uh, max out at 20%, 10 to 12% is usually a good option. That's like pretty average, 10 to 12%. So what you do is you take your upfront payment amount, your flat fee amount, times it by 1.1, and then divide it by the number of payments you want. And that's how you build an interest into your payment plans. The other way you can do it is just say there is a 5% interest fee on our payment plans. And, you know, if you're letting your clients choose how many payments they want, you can just build it in that way. Instead of giving them like, you know, three payments for this much or six payments for this much, just tell them that, just write that into your contract. 5%, 10%, 12%, whatever you want. Again, I wouldn't go beyond 20, but you make the rules.

All right, number six is a way out. Generally, any good template is going to have a termination clause that allows you to get out of the contract if the client breaches in some way. So breach of contract is just breaking the rules that are in the contract. So a good example would be if the client doesn't pay you, you don't have to do the work. That's generally already in your contract.

You can also build in cancellation on 30 days notice. If it's a long-term project or if it's a month-to-month project, there is usually going to be built in there, you're allowed to cancel, or the client is even allowed to cancel if you give X amount of days notice, 14 or 30. 30 is pretty standard. What I'm getting at is cancellation based on something else that is not the normal stuff.

So I've had clients ask me about what if there's someone in my group program who's just an absolute pain in the butt and makes the experience worse for everyone else? Can I kick them out? If you write it into your contract, you can do that. You just have to be clear, again, about the types of behavior that are unacceptable and write that out in your contract. And you can do it based on discretion. But again, you have to be careful not to be discriminatory in that in your use of dirty discretion, because that would be a problem. I mean, for obvious reasons because you shouldn't discriminate, but also because it will cause you huge legal liability.

So the way that you do this is basically think about the nightmare clients you've had. What types of behavior just like really grinds your gears or hit you the wrong way or made your life really difficult and write that in. I can cancel. If you do X, I can cancel this contract with no notice. And if they sign it, then they've agreed to it. And anytime you're doing a termination clause, anytime you're talking about cancellation, you should also talk about money. So if you're canceling in the middle of a project, if you're ending in the middle of a project, what happens to the pending payments, what happens to the payments like for work that wasn't completed yet, what happens for the payments for work that was completed? And that really depends on your payment structure. But I just wanted to throw that out there.

All right, number seven, we made it. Number seven, last one, a testimonial release. Andor publication of some kind. So if you're a service provider, can you use this project in your portfolio? If you're a coach, can you use communications from the client like in your Slack channel or something they DM'd you? Can you use that as a testimonial? I guess that's really two. You get a bonus one. So a testimonial release and a portfolio release, because those are kind of going to be two different things. Can you use the work that you did for the project on your portfolio or in your marketing or something like that? And that's gonna be more like if you're a web designer, screenshots of their website.

If you're a copywriter, use it as a sample, that type of thing. Separately, can you use communications from the client, like feed like an email that they sent you? Wow, I just read through the first draft and it's amazing. Can you use that as a testimonial? And can you use their information and their photo and that type of thing with it? So generally, if you don't have this in your contract, you can still take a screenshot of that message and just crop out any identifying information and use it anonymously. But there's more power, testimonials are stronger, there's more weight to it. If there's a name and a photo attached to it, a name and a face gives you more credibility.

So you want to make sure you have permission before you do that. You can build this into your contracts, but I would also get explicit permission just because people don't read the contracts always. Just from a client management perspective, I've been in I've been in courses before that have a Facebook group and people have gotten upset about their posts from the Facebook group being used in marketing, even though it's in the terms and like it says it in the Facebook group rules, people don't read them.

So it's generally better to get permission explicitly, but if it's in your contract, you can fall back on it, right? So emotionally, for client management purposes, ask permission, but have it in your contract for legal reasons.

There you have it. I'm gonna run through that list one more time. Seven things and/or eight things that you didn't know you could put in your contracts. Number one, get payment up front or at least a deposit. You probably knew you could put that in there, but I just had to add it in. Number two, late fees. Yes, you're allowed to charge late fees. Don't go beyond 12% annually.

Number three, automatic cancellation for ghosts or take them off the schedule. Number four, refund policies. They can be whatever you want, just make it really explicit what it is. Five, interest on payment plans. Again, 12% is generally a good rule. Number six, termination clause. You probably already have one, but add in anything that your nightmare clients would do that you want to be able to get out of. Seven, a testimonial release slash publicity or portfolio or marketing release for your actual work. So two, that's kind of two. Permission to use communications as testimonials and permission to use your work in your marketing.

I would love to know did you already have these? Are any of these surprising to you? Which ones are you gonna add in? Send me a DM on Instagram or post it in your story and tag me. I'm so curious.