EP. 008

Contracts and scope creep: What you need to know

Scope creep is a major problem in the freelance world. So how can you avoid it? Paul and Kaleigh talk about how contracts create healthy boundaries and keep projects on track.


This podcast is sponsored by our friends at Freshbooks, they make accounting easy for freelancers.

FreshBooks is offering a 30 day, unrestricted free trial to our listeners. Sign up today and check out cloud-accounting software (for freelancers who aren’t accounting peeps).


 

Transcription

Kaleigh Moore:
So Paul, one of the questions that I had when I started freelancing, related to contracts.

How do you know what goes into a contract and how do you know that it’s reliable, and when do you send it in the process? There’s so many questions that go along with that. What’s your experience with contracts and how have you figured out how to master this part of freelancing?

Paul Jarvis:
I think contracts are 100% important for freelancers, because you want to set yourself up not so things to devolve into a lawsuit.

The reason why I have a contract is because I don’t want there to be lawsuits.

Kaleigh Moore:
Lawsuits are bad.

Paul Jarvis:
Lawsuits are super bad, especially if you’re a freelancer. It’s a zero sum game. You have to spend time, and I’ve luckily never had to do this, but you have to spend time in court with a lawyer. It’s got to the point where things have gotten really really bad.

I think a contract really helps avoid those sorts of things.

The other thing that I think a contract needs is really just to put in writing what you’ve already communicated with the client. I don’t think contracts really include anything new to somebody. It should just restate so you are 100% sure that both parties are on the same page, what you’re gonna do for them, so the scope of work, what the deliverables are, how much those things are going to cost, and how long those things are going to take and who owns what.

But really, contracts need to be worded in a certain way to cover legal basis and stuff like that, but the gist of a contract is just that. And that sounds pretty good to me. And that should sound pretty good to any client that wants to work with you as well.

Kaleigh Moore:
Absolutely. And I think that one of the other things that I know you and I have talked about before is net 30 because that’s a big problem for a lot of freelancers. And even going past net 30.

So how does that relate to a contract and what do you need to say about your payment process and expectations around that?

Paul Jarvis:
I’m glad you brought this up, because a bunch of years ago—like a lot of freelancers—I had net 30 or net 60 and I was like, “This sucks.”

I didn’t know why I was doing the work now and getting paid for it way into the future.

And then I was like, maybe if I do net 15, every problem will be solved. And still I was like, why am I waiting to weeks for money? I like money. I’m doing the work, I should get paid.

So I was like, what if I scrap all that and do net 0 for clients? And so I kind of figured, if I’m doing the work now, I want to get paid now. Logically, in my brain it made sense.

And then luckily I pitched it to clients, and they were like yeah okay, that makes sense. A couple of times when I was working for massive multinational companies, they had to figure out tricky ways to pay me because I wasn’t gonna budge, once I figured that net 0 kind of made sense. So I had people paying me out of digital petty cash, doing payments of $500 a day for a couple of days because they weren’t allowed to, it turned into a vendor invoice if it was over $500 or $1,000. So they were like, “Well I guess we can just expense it as a petty cash credit card thing.” I’m like, “Whatever you gotta do, I’m getting paid.”

Kaleigh Moore:
Make it happen.

Paul Jarvis:
Exactly. And really all net 0 means is that I’m doing the work, so I have to get paid for that work now. If you want me to keep doing the work, then you have to pay me right now. Not in 30 days, not in 15 days, not in 60 days. Right now. And what I found, and you probably have some stories about this too, is like, it almost now becomes a race to see how quickly a client is going to pay me in terms of minutes. I send the invoice and then five minutes later or eight minutes later, I get the confirmation that the invoice has been paid.

Kaleigh Moore:
That’s magic.

Paul Jarvis:
And I do a little happy dance in my chair—which I’m not gonna do right now because my chair is ridiculously squeaky. But I think that’s been a huge thing for me. And it’s in the contract. It says, invoices must be paid immediately on receipt. Net 0 for invoices.

Kaleigh Moore:
Listen up folks, put that in your contract.

Paul Jarvis:
Do it. Because seriously it makes sense.

And the other thing that I think that kind of helps get around is, well there’s a few things.

The first is that a client really becomes aware, “Do I have enough money to pay this freelancer?” Because, newsflash, sometimes clients don’t. And that sucks when they don’t. But if they see that, well I’m not even gonna get this unless I have the money for it, so I have to make sure that I have the money for it. ‘Cause I’ve had a bunch of times where I had to chase clients down and been like hey, I’ve done the work, you have all the work, I want to have the money, where are you? Hello? Hello?

Kaleigh Moore:
I’ve had that happen a couple of times too. And it’s never fun. It’s always worked out well, but the whole process is just like, ugh. Miserable.

Paul Jarvis:
I’ve had it not work out a bunch of times.

Kaleigh Moore:
Really?

Paul Jarvis:
In the early days I don’t even know if I had terms for payment. This was so long ago. I had one client and I was working with them on multiple projects. And then they missed a payment, and I was like hey, can I get paid for this? And they’re like yeah, it’s coming, it’s coming, it’s coming. And then they would give me more work. And I was like, I don’t want to say no to this new work because I want to get paid for all the work. And so it just kept racking up and racking up. And eventually, they owed me so much money. And I had to, I was like, what am I doing? What is happening here? And I did actually have to involve a lawyer. I didn’t want to sue them, I just wanted a lawyer with a legal letterhead to start to send them threatening notes and emails and calls.

Kaleigh Moore:
Right, because that usually does the trick.

Paul Jarvis:
It does. And I ended up getting paid about half of what I was owed. But I really, really learned that I don’t want that to happen again. And that’s another thing with net 0, is that you’re never on the hook, except for the very last payment. And the very last payment shouldn’t be more than like 20%, 10%. Not a whole lot. And if a client has a habit of paying me right away for all of the other payments, chances are they’re probably not gonna miss that last one.

Kaleigh Moore:
Right. And you’ll probably continue to work with them too, because they pay you on time and it’s working well. I mean, the clients who don’t end up paying you quickly or at all, or they take a really long time, I’ve had a couple of those where they’re like oh yeah, I’m just waiting for some money to come in, and I’ll get you paid quickly, and it ends up being 30 days or 60 days. I mean, it can be tempting when they come to you again, and have another project a few months down the road, but I think it’s important to remember that and kind of make notes if you have a CRM or something you use to manage your clients, or even just a simple Excel spreadsheet of how long did it take for that person to pay you. ‘Cause you can forget. If you’re working with a lot of different people, that can be something that slips your mind, ’cause that has happened to me too.

Paul Jarvis:
I really like that idea, of keeping track of delinquents.

Kaleigh Moore:
Yes!

Paul Jarvis:
And people that pay on time, because the clients that pay me on time every time, I like those clients. They’re good clients. And maybe they deserve a follow up if you haven’t worked with them for a few months. You can start to kind of sort the good apples from the bad apples in that case.

So let me ask you this: what happens if things get outside of the contract or if people start to ask for things that are not in the contract? Even if you’ve done your job and put the best contract ever, brcause that can happen.

Kaleigh Moore:
That’s really tricky. In my experience, if the client and I have had a good relationship up to that point and it’s the first project that we’re working on, and it just kind of makes sense to include an extra round of edits, for example. Because we’re learning what each other needs because it’s the beginning of a project together, we don’t exactly know everything that the other person needs to know. It’s a learning process. In that situation, I will sometimes be like okay sure, I’ll do it this time, but keep in mind that next time it’s gonna cost $X amount, or I can’t always promise that the turnaround time will be the same. I think that’s one of the only situations where it makes sense. But I don’t know. For some freelancers, I feel like if you set that up, it kind of sets a precedent. So it’s a really slippery slope. You have to be careful with it. I mean, what do you do?

Paul Jarvis:
I developed a magic sentence. If somebody asked for something out of scope, I’d always use pretty much verbatim, because I’d used it so many times over the years:

“I’d be happy to do the work for you, but since it’s out of scope, it’s going to cost X amount of money and take Y number of days to complete. Shall I get started?”

And pretty much every time, the client’s like, cool.

It’s also a really good sentence because it reins clients in. If I tell them, oh it’s gonna cost an extra grand and it’s gonna take an extra two weeks to do. Then chances are they’re probably gonna say, you know what? Let’s hold off on that ’til phase two, or let’s hold off on that until we launch this thing. So I find it’s really good, it really lays their focus as a client. Because clients are business owners, we’re business owners. Sometimes we want to launch with all the things, all the bells, all the whistles. And sometimes we need somebody to rein us in. And sometimes, for a client it can be the freelancer who’s getting paid for the work. So I find that it’s really good because it gets clients to think, do I actually need this thing? It’s gonna cost me more money, it’s gonna delay the project by this amount of time. If I really need it, then okay let’s do it. If I don’t really need it, then let’s put a pin in it.

And then that’s always something you can follow up with the client later, like a month or two after you launch the project. Like hey, you asked me to do this and we didn’t, that wasn’t part of the scope of work in the contract for the first project. But maybe we can get started on that now. And then it’s like, a pretty easy in for more work, if you like that client.

Kaleigh Moore:
That really is a magic sentence. Look at all you can accomplish with just one sentence. I love it.

Paul Jarvis:
So what else about contracts do you think that freelancers need to think about here?

Kaleigh Moore:
This is kind of a common sense type thing, but I’ve made this mistake before, especially when I was just getting started. Make sure that your contract is not a Word document or a Google document that’s editable. It needs to be some sort of locked down format once you’ve customized it and put it all the things that you need to. Even if you’re working from a template. You need to save it in a format where the client can’t go in and sneakily change anything. I’ve never had that happen to me but I have sent it in that format and I thought after the fact, oh my gosh, that could have happened, and that would have been terrible.

Paul Jarvis:
I didn’t even think of that. I always send the contracts in PDF format, but there are services like Bidsketch for example, and a couple of other ones that I can’t think of off the top of my head, where they too send it as a webpage, like a living, breathing webpage where the client can’t edit it. ‘Cause that would suck. If you’re like, I don’t think I wrote that, or I know I didn’t write that.

Kaleigh Moore:
You probably wouldn’t even notice until after the fact, too. So yeah, that’s kind of one of those simple things to keep in mind.

Paul Jarvis:
I definitely think that’s a good one.

So let me ask you this. Do you have both a proposal and a legal contract for projects, or is it just kind of mushed into one where you just give a contract that has all the information that a client needs?

Kaleigh Moore:
So almost everything is in the contract that I use. I use Creative Class contract for every new client that I work with. But the process details and the project proposal, all of that usually happens within email. And I have some automated, well they’re not automated emails, but they’re template emails that I work from, so I’m not writing those from scratch every time. And that’s where we kind of feel out what the project is and then all those details get put into the contract as well. So I don’t have an extra document that I do that because most of the back and forth, I found at least in my experience, happens in the email setting. So yeah, I just kind of do it that way.

What do you do? Do you have two separate documents?

Paul Jarvis:
I use a Creative Class contract as well, but I use two only because I want one more chance to pitch.

I’m a bit of a sales person, not in the traditional way, but definitely I’m really good at selling freelance services, just because I’ve done it for so long, I use a proposal too.

The way that I kind of set the proposal up is because I want one last chance to pitch my services. I define what the problem is, basically verbatim what the client came to me. If they say oh, I want to increase my eCommerce revenue on my store, then I’m gonna say, I will help you increase the eCommerce. So I basically just parrot back to them what their problem was, and how I would solve it. So find the problem, outline the solution, I usually have a couple of testimonials in the proposal, which a lot of people don’t do. I’m like, this is where I’m asking for money. I need to show a bit of proof. So I’ll have testimonials kind of peppered through it. And then I’m still gonna put in what the deliverables are, the price, and the timeline for the deliverables. And then I’m gonna say, refer to the legal document for things like the process, the ownership and rights, the kill fees, all of that.

I send them both because I want to sell just a tiny bit more. So I just want one little last, here’s what I can offer you. Here’s the problem you have, here’s how I fix this for you. And here’s some social proof from other clients that I’ve worked with, or whom I fixed similar problems for.

Kaleigh Moore:
Yeah, that really sets the project up for reminding the client the value that you’re gonna provide and why they are hiring you over somebody else. So I really like that. I’m probably gonna steal that.

Paul Jarvis:
And anybody listening should do the exact same thing. Because it’s different to just have a conversation with someone, like oh yeah, I can do this for you, I can do this for you. And then you’re like oh, it’s gonna cost this much. So it kind of softens the blow of, now there’s a price attached to this client, now there’s a price attached to this project, Mr. or Mrs. Client. Here’s just one last thing that you should know about how awesome I am as a freelancer.

Kaleigh Moore:
And it’s another one of those documents that makes you look super professional and like you’ve got it together.

Paul Jarvis:
Put a bit of branding on it too. For me it’s a bit of pink, a little rat in the corner, it’s good to go.

Kaleigh Moore:
Is there anything else we need to talk about in relation to contracts? I feel like we’ve covered a lot of ground fairly quickly. We got the magic sentence, that’s all we really needed, right?

Paul Jarvis:
So I have jokes in my contract too. I think I mention vegan donuts and how I no longer accept that as a payment. I mention gold dubloons.

I think that it’s okay to show your personality and your brand and kind of the vibe of, bccause I joke around a lot. So if I’m doing a project with a client and they’re like, why are you joking around with me? That would just be weird. So they kind of get a sense of who I am before we start working together. So I think it’s okay if these documents, even if they’re a proposal or something like that. It’s okay to kind of be you. I don’t necessarily think everybody should be joking, not everybody’s as funny as I am, which is a joke. But I think it’s okay to kind of let your personality shine through, even when you’re doing things like talking about money. I think it’s still cool.

Kaleigh Moore:
It’s your brand voice. It really is your personal writing voice. And it’s a good way to kind of get the person you’re about to work with familiar with how you’re gonna communicate. So I love that. I think it’s a great way to kind of introduce that in a low stakes environment, before you get into the actual project.


Enjoy this podcast? Check out our course that teaches you the business of freelancing, the Creative Class.

 

Posted in Creative Class, the freelancer podcast   ·   See more articles

 

Want to know when new articles are published?