Consider an Engagement Letter…

When dealing with individuals or small companies, an Engagement Letter may make more sense than submitting a formal proposal or quotation.

It also makes it easy for the client to buy no purchase order is needed – just sign the letter. For this reason, Engagement Letters are widely used by attorneys and accountants.

Such was the approach I recently suggested to my Apple computer consultant. Yup, I finally decided to move on from the old XP machines that have served us so well.

After getting our new computers up and running, we talked a little shop. New to consulting, he had some questions – and frustrations. One was getting paid. Been there – done that 🙂

After the work was done, he would submit an invoice. Terms were net due, but many were taking 60 days or more to pay. One client was even arguing about work completed.

So I suggested an Engagement Letter, combined with an advance deposit. My accountant has used this method for years (although no deposit.) I recently needed some legal help, and my lawyer did the same.

Here is a sample. It is based on my standard quoation/proposal described in an earlier post.

XYZ Client
123 Main Street
Somewhere, AZ

We appreciate the opportunity to work with you regarding your new Apple computer system.

In order to ensure an understanding of our mutual responsibilities, we ask our clients to confirm the following arrangement:

Tasks: Consultant will perform the following (on-site as needed):
— Discuss needs and recommend system configuration
— Arrange for purchase of hardware and software (to be paid directly by client – not consultant)
— Install Windows as a virtual machine, and port data to new computer
— Install virus and backup software
— Set up e-mail accounts
— Provide basic training and answer questions
Additional services can be provided for additional fees.

Schedule: By mutual agreement.

Budget: $XXXX, based on 16 hours. Please note this is not a fixed price proposal. Actual time and expenses will be billed. Budget will not be exceeded, however, without client approval.

Payment: $1000 deposit, with remainder due upon completion of above tasks and presentation of invoice.

If the foregoing agrees with your understanding, please sign the enclosed copy of this letter and return it to our office. Thank you.

————————————————– —————————
Joe Consultant                                                   Date

PLEASE SIGN ON THE LINE BELOW THAT YOU HAVE READ THIS ENGAGEMENT LETTER AND AGREE TO ITS TERMS.

————————————————– —————————
John Client                                                         Date

Policy Statement & Business Practices

Our clients often have questions about our business practices and policies. This document addresses common questions. Our intent is to help you understand our practices, so that we can better serve your needs.

Rates -Our rates are $XXX per hour ($XXXX per eight hour per day), plus expenses. On-site time is billed portal-to- portal while office time is billed at our regular hourly rate.

We do not charge a premium for overtime, night shift, weekends, or holidays. Our rates are subject to change, but engagement letters or purchase orders received within the quotation validity date will be honored as quoted.

Expenses – All expenses incurred for the client will be billed at actual cost, with no markup. Consultant will not purchase hardware or software. Client will pay vendors directly.

Travel – Travel time is charged at our regular rates, as follows:
-Local – No travel charge for full day consultations. For less than a full day, time will be billed portal-to-portal.
-Out of town (Air Travel) – One full day labor is added to consultation fee for travel within the contiguous 48 states.

Travel expenses will be invoiced at actual costs. We normally make our own travel arrangements, but if made by client, they are subject to our approval. We normally purchase “no-penalty” coach airline tickets.

Quotations – Quotations are valid for 60 days, unless otherwise stated. All quotations are budgetary – not fixed price – and actual time and expenses will be billed. The quotation will not be exceeded, however, without client authorization.

Terms – We can proceed upon receipt of a signed engagement letter or purchase order and a $1000 deposit for clients with established credit. Balance due upon completion and presentation of invoice. We accept checks, credit cards, or bank transfers.

Confidentiality and Non-Disclosure – All client information and communications are held in strict confidence. Client Non-Disclosure Agreements to this effect are normally acceptable, provided they do not contain clauses restricting our right to do business with others.

In addition, client names are not released without prior approval , nor do we use client names in our marketing materials.

Certifications and Insurance – If information disclosure, certifications, or insurance are required by the client, these must be forwarded to us for evaluation prior to issuing a quotation.

Conditions transmitted subsequent to the start of work will invalidate the quotation, and subject the client to any incurred expenses. Specifically, the following conditions apply –
(1) we do not disclose names or information (technical or financial) about any client without express consent of that client,
(2) we do not submit to financial audit to any agency, public or private.

Performance and Cost Guarantees – Due to the uncertain nature of most consultations, we are unable to precise estimates. When troubleshooting, we can not guarantee success. Often the extent of the problem is not known until an initial evaluation has been made.

As such, all cost estimates are based on a level of effort, but estimates will not be exceeded without your prior approval. You will always, however, receive our best professional efforts and advice in any consultation.

Thank you for the opportunity to work with you.

Like my quotations, the first page outlines the tasks, schedule, and budget. The second page is the “boilerplate” that remains the same. Keeps things simple – always a good idea.

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