29/07/2024
Not getting paid = get a service agreement ❌❌
As a law firm, it seems obvious that we would always advocate for service agreements to be signed. But actually there are many other factors to consider before deciding.
Someone approached us to draft a service agreement, upon further questioning, she revealed that it's because she wasn't getting paid. Our next question was: but why aren't you getting paid?
That led to some investigative work and their customer's profiling. The result was actually customer ghosting / delaying. So is a service agreement going to solve this? No.
A service agreement can be a solution if you are constantly facing disputes being raised by your customers like "you didn't deliver the services", increasing service scopes, "that day you said RM### but now you charging RMyyy".
But if your customer is ghosting you, they'll ghost you even if there is an agreement signed. Then the question is whether you'll go forward to enforce the agreement in Court or not. To decide on that, you gotta do some customer profiling:
1. How much is the average debt? Less than 10k? You'll probably not go to Court
2. Are your customers sdn bhd / enterprises? For enterprises, maybe they'll pay with just a lawyer's LOD.
3. What's the most common reason why they're not paying?
4. If your customer's aren't paying you in a timely manner / ghost, then we gotta look at operations rather than just service agreement. Things like do you have the right PIC (cause staff comes and goes, but HOD?); do you follow up regularly and consistently; how do you follow up?
Lastly, do you have evidence and facts to back you up in your claims for payment? This is where your communications and service agreement (if any) will come in to help you.
So is service agreements needed? Best scenario, have it. Otherwise, make sure your operations and record keeping are well thought out.
