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meeting verbal agreements

Verbal Agreements are Worth the Paper They’re Written on

Business in the modern world is very much a buyer’s market. With the internet making thousands of businesses all over the world available to potential customers at the click of a mouse, buyers don’t have to remain loyal to any one company.

As business owners we all appreciate that people buy from people and there is a particular emphasis on the phrase ‘know, like, trust’. This means if a potential client doesn’t gel with us, or get the deal they want, they are more likely to go elsewhere.

This means the business owner may spend more time and energy on building relationships with potential clients, speaking with them regularly and being professional, amenable and flexible.

This is the way that business should be carried out, but it is important to keep at the back of your mind that this isn’t friendship – it is business.

When a Friendly Chat Can Go Bad

Business is often carried out via informal chats, when one or both parties negotiate what they want and outline their expectations verses deliverables.

This is a perfectly acceptable way to negotiate a transaction.

Likewise verbal agreements and promises are commonplace when reviewing deliverables or during the credit control process.

But what happens when the client reneges on their verbal agreements? What happens when the client not only reneges on their promises but deny they ever made them? Suddenly all that friendly relationship has disappeared and you are firmly in the realm of client/supplier.

With no written record of such verbal transactional agreements it is literally one voice against another. Depending on when the disagreement took place, you may already have produced the work or delivered the goods.    

You may have little choice in this scenario; you either hire solicitors at great expense or you write-off the work and client and learn from the experience.

Neither choice is that appealing when we come right down to it.

Prevention is Better than Fire-Fighting

There are simple ways of preventing this break-down in client relationships.

After every conversation where something is agreed, whether it is a service, delivery, approval of deliverables, promise of payment or discounts – follow up with an email outlining what was discussed.

It doesn’t need to be complicated, just a simple statement such as “We agreed on 30 day payment, invoiced in advance, and delivery within two weeks.”

By asking them to agree that this is what was discussed you then have a written record should there be any dispute along the way.

By keeping everything above-board with an electronic paper trail your business looks professional but by no means diminishes the friendly rapport that you have with your clients.

Aren’t Terms and Conditions Enough?

You may be thinking that this is all another pointless task to your ever-expanding list of things to do, because you already have professionally drawn up terms and conditions. If you don’t then read here about why you should!

Whilst terms and conditions are an essential aspect of your business interactions it would be a rare business owner who stuck to their terms and conditions without deviating from them ever.

Terms and Conditions offer you blanket protection but every business transaction is different. Perhaps your T&Cs state you will deliver the products within two weeks, but your client needs them in 10 days, perhaps you have waived the 50% upfront payment as they are a recurring customer, perhaps you have offered them a 10% discount due to being a retained client or they have made a bulk order.

Any of these deviations should be put in writing in order for the expectations for both yourself and the client to be clear. You can’t chase them for the 50% upfront payment if you agreed to waive it, especially if you forgot that you agreed this. It looks unprofessional and will annoy your client to the point you may lose them and any further referrals from them.

So, use terms and conditions as an overall blanket set of guidelines for your company but any deviation from these should be followed up with an email which the client is asked to agree to.

Transparency

Transparency is a word that is regularly used to show that a company is honest and upfront, and following up on such business discussions with a summarising email is in the spirit of transparency.

You can set out your expectations, set out what you intend to deliver and when, and summarise any other aspect of the discussion of any relevance.

It’s an opportunity for both you and your client to re-evaluate the transaction ensuring you are both happy with the expectations as are laid out. And if you are not they can be renegotiated before any money has been exchanged or any work has been carried out.

It may seem to be pulling the relationship away from friendly into business but your clients will thank you for it, and you will be pleased that you took the time should there be any disagreements further down the line.

Get in touch if you’d like to find out more about creating clarity and removing any reliance on the accurate recollection of verbal agreements.