What to Know About Using Service Agreements With Clients

When contractors and clients join forces to get important work completed, both can be protected by service agreements. This essential document provides a roadmap for how each client-contractor relationship will proceed. Contractors come away reassured about being paid, while clients feel confident that services will be completed on time and with discretion.

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PDF Template - service agreement template

To clarify why a service agreement template is helpful and how both clients and contractors can benefit from using one, this guide will cover:

  • Basics That Every Service Agreement Should Include
  • Extra Provisions Worth Adding to a Service Agreement
  • Best Practices for Using a Service Agreement Template

Basics That Every Service Agreement Should Include

If you use a service agreement template, you can expect to encounter these basic clauses:

  • Scope of services. Which services will the contractor provide for the client? These should be outlined in detail, with nothing left up to question. This information can be included in an exhibit that accompanies the document, complete with a full list of services. The agreement should also highlight where the referenced services will be performed. 
  • Details about compensation. This section should explain that, once the listed services have been completed to the client's satisfaction, the contractor will be invoiced and paid at a specific time. From there, the compensation clause can detail how payment will occur, which methods (such as check or credit card) are acceptable, and where payments can be sent.
  • Independent contractor relationship. Sometimes, disputes between contractors and clients arise because their relationship is misconstrued as that of employer and employee. Such confusion can be avoided by clearly explaining that the party offering the requested services is an independent contractor — and should therefore not expect to receive benefits or act as an agent on the client's behalf. 
  • Confidentiality agreement. Often, it is necessary for the client to share proprietary information with the contractor. Should this occur, a confidentiality agreement can protect the client's intellectual property.

Extra Provisions Worth Adding to a Service Agreement

A service agreement template provides a basic blueprint for clients and contractors. This can then be customized with a variety of additional clauses, several of which are referenced below:

  • Arrangements for supplies. In some contracts, the client is responsible for providing the supplies needed to carry out the requested work. In other cases, it may be prudent for the contractor to provide certain supplies. Both parties should understand from the get-go how these materials will be obtained and handled. 
  • Records of expenses. Depending on the scope of services, the contractor may eventually incur expenses that the client is required to cover. This clause accounts for such a possibility while also acknowledging the need for a detailed invoice. Additionally, this section may include a request for written permission prior to making purchases above a certain dollar amount.
  • Consequences for late payments. In addition to highlighting when payment is due, the contract should explain what will happen if the client is not paid on time. Typically, the client will receive a late fee, as outlined in the service agreement.

Best Practices for Using a Service Agreement Template

How you customize the service agreement template matters just as much as what, exactly, it contains at the outset. These best practices will help you make the most of this resource:

  • Be specific. From the scope of services to compensation terms, every portion of the service agreement must go into detail. Use specific terminology to make the goals of this business relationship abundantly clear. Ideally, a neutral third party should be able to read the contract and describe exactly which services the contractor intends to provide, which supplies the client will furnish, and how the contractor will be paid.
  • Don't commence until the contract is signed. Reviewing and signing the service agreement is crucial for protecting both the client and contractor. As such, both parties should avoid moving forward with providing services or even acquiring equipment until the contract has been signed.

Signing a Service Agreement Securely

A service agreement template provides a great start for outlining the relationship between client and contractor — but the signing process is just as important. Once you feel confident in the contents of the agreement, look to solutions such as Nitro Sign to get you across the finish line. This streamlined approach provides much-needed security. To learn how it works, get started with a free trial.

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