Written agreements for your consulting business do more than just help you avoid shady deals and misunderstandings. One of the first rules of great client management is to clearly define expectations. A well-written consulting agreement does just that: clearly lay out how the relationship will be launched and managed. It also ensures that in the eyes of the government you are considered an independent contractor and not a de-facto employee. Finally, getting payment terms in writing is one of the best ways to make sure that you get paid for your work and have good legal recourses if the client threatens to not pay you.
Fortunately, by using one of Obie's consulting agreement templates as are starting point you're 90% done with the writing involved. The first step is to decide whether you will be billing on a retainer basis or in arrears. The answer to that question will determine whether you need a Retained Services Agreement (or RSA) versus a Master Services Agreement (or MSA).
Professionals such as high-powered lawyers, accountants, as well as marketing agencies, usually work on retainer agreements. The idea is that the client is reserving a block of your time during the upcoming month, so they go ahead and pay for it up front -- every month. The wonderful part about working on retainer is that you don't have to worry about collecting payment. Sometimes you don't even have to provide itemized breakdowns of hours. The downside, is that you have to be confident about keeping your client happy. I've seen retainer agreements get ugly quickly when the client starts thinking that you're not actually giving them the time they've paid for.
I've blogged extensively about the use of MSA contracts. They are my preferred form of agreement when contracting out project teams with defined deliverables. The "master" agreement covers the overall terms of the relationship so that they only have to be negotiated once, at the beginning of the client relationship. Specific phases of the project, or its deliverables, are detailed out in simple addendums to the master agreement, called Statements of Work (or SOWs for short). An SOW document can have very specific project requirements for payment, or it can simply quote cost and payment terms along with a basic scope and schedule statement.
Obie's MSA+SOW bundle contains a fully-annotated Statement of Work template similar to the one pictured below.
A simple Statement of Work document for Ruby on Rails consulting
Benefits of Starting With a Proven Template
When you use one of my proven MSA or RSA templates, the hard work is done for you. All you need to do is to go through and fill in the blanks. If it's the first time you're using my template, I would also suggest that you run it by your lawyer or legal counsel for review and approval. However, the cost difference between needing your lawyer to review an already written document versus having one written just for you from scratch can be thousands of dollars.