One of the best ways to avoid misunderstandings or late payment is to put a contract in place. You’re probably thinking that sounds like overkill — and it might be for coffee shop owners and their regulars. But for freelancers, contractors, and business owners who work on a project basis or in wholesale, a contract is a good idea.
Here are a few reasons you might want to use a contract in your next transaction:
They create a shared understanding.
A contract should create a shared understanding of how you and your customers should act and what’s expected of them. That means the contract should include an overview of operational and sales processes as well as how the customer can use the product or service.
They help you manage expectations.
If everyone is on the same page about the terms and conditions of a sale, then you can easily manage your customers’ expectations. It’s all there in the contract — costs, timelines, and other policies (like refunds, complaints, etc.). Effectively managing expectations is key to good customer service and repeat business.
They help you get paid.
A contract should communicate the cost of goods and services and when payment is due. If your customer misses payment or refuses to pay, a contract gives you legal leverage to collect payment. Not to mention, contracts can protect you from chargebacks.
They help minimize disputes.
A contract can’t necessarily solve all your disputes, but it should make things easier. When you have a signed document that outlines all your policies and what was expected of the transaction, it’s easier to mediate difficult situations.
There are a number of other reasons contracts are a good idea, but you get the point. We recommend getting your customer’s signature next to a clear description of the goods or services you’ve sold, along with other important information like timelines, deliveries, and return or refund policies.
Aren’t sure what to include in a contract? Don’t worry. We’ve developed two contract templates* to help you out:
| Service Based Agreement Template | Sale of Goods Agreement Template |
Even better, once you’ve prepared the template to fit the transaction, you can attach it to the invoice and send it to your customer. We’ve added a feature to Square Invoices that allows you to attach files, whether that’s contracts, before/after images, bills of sale, or purchase orders (just make sure they’re PDFs or jpgs).
Your customers can download, sign, and store the attachments for their records to ensure the terms and conditions of the transaction are understood by both parties.
To learn more about how to help protect yourself and your business from non-fraud chargebacks in your contract or invoice, visit our best practices guide.
*Square is not a law firm, an attorney, or a professional advisor in any industry. Square provides this template to individuals who choose to prepare their own contractual documents and it does not constitute legal advice. If you need legal advice as to specific contract terms or have questions regarding a term’s applicability or enforceability, you should consult with a licensed attorney.