Client contracts are probably familiar to you since you, yourself work with clients or have worked with clients. But you don’t have to use client contracts just because you recognize what they are. You need to create a written agreement to use them so that you and your business are protected.
Poor performance of contracts is often blamed on the client. It is much better to avoid dealing with problems once they arise by watching for certain red flags and acting proactively to provide outstanding service.
One of your clients will almost certainly want to cancel their contract with you this year. That will be a challenge for you. There are many reasons why people break contracts. For example, they may not be able to fulfill their debts due to cash flow problems. Sometimes customers change their minds about your product or service, or they’re unhappy with it because it didn’t meet their expectations.
The question is, what is the best way to do that? How do you go about having a contract that gets both you and your client on the same page? And what do you do when a client violates that agreement? How do you go about it? How do you protect your business? All these questions constantly arise.
TIPS ON HOW TO HANDLE THIS TASK
Whatever the reason, you must inform your client that breaking the contract will not benefit your business. Your organization has committed resources and fulfilled your obligations, and they must do the same. Keep your cool. If the company is having trouble, find out whose vendors they are paying first. When they elected to terminate the contract early, they were aware of your cooperation. If they are dissatisfied and the perceived value of your solution is poor, point out some areas where they could benefit more from it.
MAKE THE PHONE CALL
You should pick up the phone and call them if the request continues beyond two emails back and forth. A conversation is necessary to better grasp client emotion and to assist you in resolving the problem.
FIX THEIR ISSUES WITH A PLAN
It doesn’t matter who is ultimately at fault; both firms are in bed together, and it’s in both of your best interests to work together to get back on track as soon as possible. If they’re-commit to the terms of the agreement, try to understand why they want out of their contract, discuss any concerns, and come up with a plan to fix the issues.
REMIND THEM OF YOUR AGREEMENT AND THE TERMS
If you have customers with a lot of past-due, unpaid invoices who demand to be let out of their contract as soon as you start hounding them, I’ve found that reminding them of the terms they agreed to is the best place to start. Outline everything they agreed to pay and remind them that even if they don’t use your service or technology, they are still responsible for the entire period of the agreement, including all future invoices.
BE PROFESSIONAL, DON’T BE EMOTIONAL ABOUT IT
You’ll have to have difficult discussions with your clientele. Write down the issues you think need to be covered before each conversation, ideally as close to word for word as possible so you can say them on the phone. As much as possible, keep emotion out of it. You must be establishing a business. Customers who do not pay their bills and do not honor their obligations are not suitable business partners.
MAYBE IT’S TIME TO RESTRUCTURE OR CHANGE THE AGREEMENT IN PLACE
If a client breaks a contract, it can mean that when setting expectations, communicating effectively or evaluating whether they were a good fit for our brand, I failed to fulfill my responsibilities as a salesperson. The second chance I have been given to re-align the relationship with these clients is something I appreciate when speaking to them.
Depending on the situation, you have some options once you’ve decided a restructured contract is necessary. The solutions you could propose would be modified payment terms that scale, extending the contract duration by a month or adding some additional product usage or features. Get them to spread the word about how great a partner you are to other companies by finding the right fit for them.
In the event your customer is taking advantage of you, you should walk away. Whenever your business encounters bad clients, trust your gut and work hard to find new partners that will respect and love your business.
Here and MCDA CCG we offer one-on-one coaching sessions on even this one topic in depth. Learning this will allow you to be a better business partner, owner or employee. Reach out if you are having trouble with setting these boundaries with your clients now or in the future.
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