Contracts of Understanding and Financial Agreements are essential business tools. They not only provide structure to your business -- they also save your relationships. Without a clearly defined and agreed upon contract or agreement misunderstandings can develop. Your expectations of your clients and their expectations of you can fail to match and all sorts of problems can occur. Proper contracts and agreements provide a reference point for discussions should situations change.
Client relationships can be tricky at the best of times. It's important to do all you can to clarify and agree on the detailed expectations and obligations. Of course a detailed contract will rarely save the loss of relationship or a break of trust, but in such situations it's helpful not to be faced with added problems of court, lawyers and attorneys. (Especially without having the back-up of decent contract.)
Formal signed agreements or contracts are so useful for
- attracting clients who are just as committed to the end result as you are
- when your client's desires/expectations or life/business circumstances change and they want to change the scope of work or end the project/services all together
- reducing the number of no-shows and/or missed payments
Yes, it is true that very often contracts and agreements are filed away in a drawer and never looked at again once they have been signed. This is because you and your clients can now focus on the services because there is an agreed upon understanding of the what's, how's and why's. There is no need to refer to the agreement because the client/provider relationship has been properly established and both parties are committed to creating the outcome. It avoids the feelings of "being taken advantage of" on both sides.