more-arw search

Q&A Forum

Services work using an Engagement Letter vs. a formal Master Services Agreement

Mark Sphar's Profile

engagement letter vs contractI recently started work for a services agency and the past Controller/CFO didn't ever push the issue with having a formal contract in place.  The thought was so long as the money was paid and the payment terms were somewhat outlined in the Engagement Letter, then all would be fine.  Company has operated fine under this mode for 10+ years.  I prefer a little more formality in my engagements and have started pushing for formal agreements.  Needless to say, there is some push back, not to mention what to do on future engagements with long-time customers that are not used to formal paperwork.  

Question for the group...have any of you had similar transitions?  Advice on how hard to push?  The owners (S-Corp) don't seem to have a strong preference, but are supportive as long as it does not disrupt business.  Does the marketing/services world work more in Engagement Letters than formal contracts?   Past years write offs have not been terrible.  

Appreciate the feedback in advance.  

Mark

Answers

Topic Expert
Joan Varrone
Title: CFO
Company: Cloud Cruiser
LinkedIn Profile
(CFO, Cloud Cruiser) |

I do part time CFO work for a number of companies and I use a consulting contract; I either use mine or one the company is happy with as long as it meets my needs. I have never had anyone push back on this and I am working with start ups which only at times have a few people.

Hope this helps

Joan

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

For many years I tried to get contracts signed without success. When I re-branded and redesigned my consulting practice, no client work is done without a contract and most without a retainer.

In this litigious society and the uniqueness of our offering I can't afford not to have a contract.

Please note it is currently 8 paragraphs long (we will be adding one new paragraph) and still 2 pages long. It is simple, yet direct; protects our company and our assets while enabling the client to end most contracts within 7 days.

For those who may be interested, the contract (we call it a 'Term Sheet') is on-line at our website.

9982 views
Topics

Get Free Membership

By signing up, you will receive emails from Proformative regarding Proformative programs, events, community news and activity. You can withdraw your consent at any time. Contact Us.

Business Exchange

Browse the Business Exchange to find information, resources and peer reviews to help you select the right solution for your business.

Learn more

Contribute to Community

If you’re interested in learning more about contributing to your Proformative community, we have many ways for you to get involved. Please email content@proformative.com to learn more about becoming a speaker or contributing to the blogs/Q&A Forum.