When selling your goods and services to another business, it's wise for both parties to sign a legally-binding agreement. This agreement will set expectations for both parties as well as provide proof of the arrangement if one of the parties doesn't come through. A contract is an invaluable record that you and your business client are willingly working together.
Protect your business by including these B2B contract terms.
Full Legal Names of Both Parties
It's best to plug as many loopholes as you can when creating a contract. That means that if your client's name includes an "LLC" or "Inc." in their legal name, then it should be included on the contract. Likewise, your clients expect your full legal entity name on the contract as well. In the event of any litigation, including these names will clarify any legal obligations.
Scope, Deadlines, and Responsibilities
As part of the "what, who, when & how much" of the contract, your client will want to know what you will be providing and how much they'll be paying for it. The agreement will offer clear details of how you will work with the client, your boundaries, and when the goods and services can be expected. If your client pushes back on paying you, the contract can be used to verify the planned deliverables.
Payment Terms and Options
Is the client expected to pay monthly? Are they to pay half of the project costs up front and the remaining half at completion? Is the client able to opt-out of the contract for a fee? Are the project costs to be paid at each milestone? Does your business take ACH or credit cards? If so, are the payment terms net 30, payable upon receipt of the invoice, or automatically billed? All of these payment questions should be clarified within the contract agreement.
Consequences for Late Payments
If you've ever considered charging a late fee for late payments, it's important to include those stipulations on the contract. The contract will clearly state the due date, how to pay, and the percentage or interest that will be charged in the case of late payment. These requirements will be obvious to your business clients when they sign the contract and agree to your contract terms.
Now that you've included these important terms on your B2B contracts, you will have evidence of confirmation when your clients pay late or not at all. If you're unable to resolve delinquent payments and need to hire a third-party collections agency, the contract is an invaluable asset to have at your disposal to help recover what's owed to your business.
