Things at Uh-Oh Enterprises just got real. Bill Wiseacre landed his first big fish client, one he has been dreaming about for years. After a lengthy sales process, the client is on board and ready to sign on the bottom line. This will mean greater financial stability, the ability to attract and retain more employees, and a tremendous feather in his corporate cap.
Even though it seems like everything has ended in his favor, Bill can’t help lying awake at night and thinking about the contract. He purchased a template on a popular legal site, and it seems legit. It hardly seemed worth it to ask his outside council to draft a custom contract, or even review the one that he downloaded.
He found himself thinking that the added expense of legal fees is quite hard to justify when you haven’t even sent out the first invoice yet.
So, Bill just used his form Services Agreement that he bought online and assumed all would be fine. Bill sent the contract to his client, who signed and returned it.
Life was great for the first little while. At the end of the first month of services, he sent the client an invoice. He’d already paid his one employee, which he had to do from his own pocket because the company didn’t have any money to speak of. So, every day, he anxiously checked the mail awaiting his first big check.
He knew he was extending payment terms because he didn’t require payment upfront, but after waiting for 30 long days, he contacted the client and asked them about payment. Imagine his surprise when he found out that the client only pays on 60-90 day terms. Bill gasped and thought, “Oh no! How am I going to be able to make payroll for a total of up to 3 months without having received a dime?”
As a result, Bill experienced one of the biggest challenges an entrepreneur faces, a lack of cash flow.
The Momentum Law Group Perspective
Reviewing documents like a contract can make or break the success of any client relationship. No two business relationships are alike, so how can a template fit every circumstance?
If Bill’s lawyer was part of the process from the beginning (i.e., drafting or reviewing the document before it got signed), the lawyer may have been able to spot this issue and they could have negotiated payment terms that would have worked better for Bill’s cash flow situation.
Using a form or template for business contracts may seem like an easy way to get the ball rolling; experienced entrepreneurs often have to learn the hard way that it is significantly more expensive to try to fix a contract than to have one drafted correctly in the first place.
If you need help drafting or reviewing a document, reach out to us for support. We’ve got your back.
Blog Posts from Uh-Oh Enterprises are cautionary tales from Momentum Law Group. Bill Wiseacre and his family are fictional characters representing real life situations that keep entreperneuers like Bill from reaching full potential. #donotbelikeBill