I am trying to get my business up and running and I came across the AIGA Standard Form of Agreement. I have a few questions that maybe somebody can help me out with.
They have it set up where you have a proposal and then a separate Terms and Conditions, but also include the Terms and conditions inside the proposal as well. Isn’t that kind of redundant? Should I just use the proposal as the main agreement for everything?
Is it ok to use this at the beginning or at the top of the Terms and Conditions part of the agreement. If not, where should I put it? Do I really need to put this into the Agreement. I have seen in other examples it is in there, but not in the AIGA one?
1A.[INDENT][/INDENT]This Project Agreement (this “Agreement”) made on the ___ day of ______ 2012, (the Effective Date) between Designer, a sole proprietor and independent contractor engaging in web design located Company Address, referred to herein as “Designer” and CLIENTNAME, a sole proprietor, Computer Technician and Web Designer of COMPANYNAME, located at Company Address, referred to herein as “The Client”.
When it comes to the end of the agreement where both parties sign their signatures, I noticed that in the Terms and Conditions section there is no signature section, but it is located in the proposal. I am a little confused on that part. Should the signature section be with the Terms and Conditions or the proposal or both?
Should the Schedule A be located in the Terms and Conditions section or should I have it in a separate document to hand out to the client?
Should you add a project proposal number or contract number? If so, what is the format or how many numbers should I put in or what is a guideline on adding project numbers?
In the Modification/Wavier section where it says that the agreement can be modified by the parties. Does that mean that the client can modify the agreement if they wanted to? If so, I thought about taking that out because I don’t want a client to modify my agreement, unless I agree with it.
When it comes invoices or late payments is it ok if I state 10 days instead of 15? Also, I was going to charge $20 as a late fee and also keep charging $20 for 30 days thereafter, is that ok? I am located in Illinois, but in general is it ok?
I have a single document which contains the project specifications (i.e. specific to that client) and my general terms of service. I call this the ‘project contract’. So on page 1, you put the client name and details, your details, project ref, definitions etc. Then follow with the project specifications, then the time table, payment structure, then general terms, then the signatures. There is no need to include the terms twice.
Unless your state has some specific requirements, this wold be your choice. CLIENTNAME001 works for me.
Make sure you add something like ‘This agreement can only be modified, in writing, with the consent of both parties’
When it comes invoices or late payments is it ok if I state 10 days instead of 15? Also, I was going to charge $20 as a late fee and also keep charging $20 for 30 days thereafter, is that ok? I am located in Illinois, but in general is it ok?
You can state whatever payment policies you want (be careful about charging interest though, there may be country/state restrictions), but most clients won’t pay you within 10 days unless you are really lucky. The reality is that most clients expect to pay invoices at a minimum of 30 days maybe even 90 days for larger corporations, so will generally be unimpressed if you try to charge them late fees for non-payment within such a short time. I suggest 30 days, followed by weekly reminders, then maybe late fees depending on the value of the client to you. It’s good to be flexible and it’s worth discussing expected payment terms with the client in advance, as some companies have strict invoicing and payment policies in place and they won’t make exceptions for you.
Thank you very much for your input shadowbox. Just to confirm, So the bottom line is to scratch a separate Terms and Conditons and just put everything in a proposal?
I will rethink my plan, but if you think about this. Credit Card companies send out a bill and if you don’t pay by that date you get a finance charge 1 day after. I am kind of following that in a way. I have a standard phase process and after each phase is finished then payment is due, but instead of giving a late fee for not paying the day after the phase is finished, I am giving an extra 10 days. The client is technically getting the amount of time it takes for you to finish each phase, plus an additonal 10 days. That is my crazy idea though. Like I said, I will rethink and most likely add the 30 day time frame.
The thing is, you are a web designer, not a faceless financial institution or money lender. So I would not advise basing your business model on those types of companies.
TBH, there is no correct way, and no method is fool proof. Bottom line, you will be owed money by clients, you will have to chase them up, and invariably you will be expected to continue working while they owe you money. How you deal with this is typically based on experience - obviously you don’t want a huge debt building up, but equally you don’t want to come across cheap for not waiting a couple more weeks. There’s not many businesses who can be bothered dealing with a pain in the backside developer who’s forever chasing them up or threatening them with late fees - they’ll just find someone else who’s a bit more reasonable.
Think about taking a large deposit upfront - 30-50%, this will cover you for most of the project. Don’t start any heavy work until you’ve received that deposit. For really small projects with new clients, even consider charging the full project price upfront.
Also, rather than charge late fees which is quite agressive and confrontational, consider offering prompt payment discounts. For example, 5% off their next bill if they pay the current one by the due date.
You’ll have to work out a lot of this along the way, each client is different. Also it’s worthwhile relaxing the rules for regular clients - I wouldn’t charge a regular client a deposit, not unless he was a consistently bad payer (in which case I would be looking to drop him anyway).
But generally speaking, if you get chummy with the guy with the cheque book in his pocket, you should be okay
Thank you very much for your excellent input. Your point taken and I will revise my plan. Yes, actually I do have a plan in place for 50% downpayment before I start anywork. In the future, I think I will give the early discount a try. Sounds interesting.
Unless, somebody tells me otherwise, I will scratch having a separate terms and conditions and just have it all in the proposal.
The thing about Late Payment fees and complicated lists of rules like this is that clients, even relatively small businesses, are not much interested in the details of your ‘late payment’ arrangements and very likely won’t take any notice of them even if they do bother to read the fine print. What will happen in practice, is that they will pay the invoice when they want to pay it, and they will not include any additional Late Fees even if you bring this to their attention.
There comes a point when it is counter-productive quibbling over a few days here or there, or a few opportunistic dollars grabbed as a result of breaking some complicated little rule. All you will do is create annoyance and ill will, and that is a bad thing. All the amaziing work you do for them will be forgotten, and you are remembered as that strange guy who wanted $20 because a phase payment was 3 days late, or whatever.
It’s one thing for credit card companies, banks etc, to do this - they can treat their customers with total contempt and get away with it, but Web Designers need to offer a more human experience, I would say.
Thank you Paul for the input. This information helped greatly. What are your thoughts on the proposal and terms and conditions question I had above? Otherwise, thank you again for your time.
