When most people think of what should be included in a contract, they consider the dollars and cents as one of the most important pieces. And I agree wholeheartedly! It’s a really important provision where I, unfortunately, see lots of mistakes and careless drafting.
That’s why today, as I continue this new series on contracts and begin my review of different contract terms, I’m starting with payment provisions. This is a topic that most people need to know and understand. Whether you’re paying someone or getting paid, the ability to understand and negotiate payment provisions is vital for any small business owner.
In this episode, I first breakdown what you’ll often see in payment clauses, including a few questions to ask yourself first. Then, I discuss some of the most common payment structures and how they might appear in an agreement. Now, let’s dive in!
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In this episode:
[02:26] – Danielle starts off the discussion with what goes into a payment clause.
[03:01] – How much is being paid? A contract needs specificity about the amount and how to calculate it.
[04:24] – Be aware of and clarify the type of currency offered if you work with people internationally.
[04:49] – Look at the agreement closely to ensure you’re doing all that needs to be done to get paid.
[05:38] – Payment contracts will typically dictate the due date of payments which can vary considerably, especially with larger companies.
[06:30] – Is there anything contingent on the payment? Usually, this means starting or continuing services.
[07:18] – Danielle talks about what happens if a payment is late. Many payment clauses include this specific provision for this scenario.
[08:09] – Additionally, you may want to include this language in your payment provision.
[08:58] – What happens if a client wants more services?
[09:49] – Price changes will often depend on the wording of the agreement and the type of payment structure in place.
[11:06] – Flat fees generally work really well for this type of project but can be structured in several ways.
[13:09] – While payments for time spent are fairly simple, you’ll still want to keep these specifics in mind.
[13:49] – Danielle discusses fixed monthly payments for ongoing services and several things to include in these agreements with clients.
[14:48] – Retainer agreements get discussed frequently but aren’t always clear.
[16:18] – Three action steps to wrap up this episode.