How to divorce your client and protect your own interests


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It sounds like the exact opposite of everything you thought and read about being an entrepreneur, but yes, sometimes you have to leave your clients behind before a project is completed or you agree to a contract extension. . It is not easy to leave a contract on the table. The reasons why most entrepreneurs remain committed to toxic work engagements can be broken down into two areas of risk: financial security and brand reputation. Both are essential to the continued success of your business, but at what cost?

Why would we consider losing customers? Again, there can be many reasons why you feel like the relationship isn’t right for you anymore. These could include:

  • Slow payment cycles, resources over-invested in engagement.
  • Constant changes in scope resulting in delayed results and strain.
  • Lack of clarity with requirements and tasks, which makes recruiting difficult.
  • Toxic work environments, conflicts with management figures.
  • Work that doesn’t match your brand.
  • No time for other projects and engagements that are more profitable and aligned with your business goals due to the constant changes that occur in engagement.

As these concerns begin to emerge within your business and efforts to resolve them with your customers are unsuccessful, you will find yourself on the verge of being ready to sever your ties. However, financial risks must be taken into account. Here are five ways to prepare for your client’s divorce to mitigate risk and reduce financial exposure.

Replace cash

Line up your next client and project to make sure you have the cash flow you need. This is one of the biggest reasons people don’t cut off relationships with customers because businesses need cash to support their operations. Start looking for replacement opportunities before your scheduled divorce date. Create an appropriate timeline that will allow you to wrap up your current engagement in a way that won’t hurt your client. Having your next customer aligned will be your biggest motivator to eventually take action.

Related: 3 Things To Do Before You Leave Your Job

Get your financial affairs in order

I have witnessed nasty financial battles when contracts are over. The balances are unpaid and the turned away customers are unwilling to pay. Getting paid in full, if you can’t afford legal action, can be tricky and time consuming. To reduce your financial exposure, you should consider the following.

  1. Adopt a fixed supply policy with a payment plan closely correlated to the completion of the work. Target for an agreed-upon payment schedule that leaves the final installment in the 5-10% range to limit exposure at the end of completion. This will allow you to quickly align with the resources spent throughout your project and with the effort. The ideal practice is to manage your cash flow based on the time spent to ensure that there is little room to dispute the percentage of work completed or open the door to possible disputes and requests for reimbursement of funds that have been received. .
  2. If you are short on time and materials, anticipate your billing well in advance of your divorce date. The goal is to make sure that your final bill is not as large. For example: if you know that in two months you are going to end your agreement, make sure that your next bill within 30 days is the highest and paid before advising of your end date. Minimize the hours worked in your last month to mitigate the risk of invoices being withheld due to your notice of termination notification. The key is to clean up your accounts receivable as soon as possible before giving notice and reduce your current bills without compromising the work you do. It is a sad reality that not all contracts are withheld by both parties, and if you are able to protect your business interests in an ethical manner, then you should.
  3. Protect your brand and reputation by doing a great job. Achieve your deliverables while working on engagement as you prepare to leave. Don’t give anyone the opportunity to slander your name or brand without merit. Avoid engaging in heated conversations, both verbally and in writing, with your clients. As cliché as it sounds, take the high road. In today’s modern digital age, we know full well that a screenshot can be shared in seconds and that your name and brand reputation is tarnished after years of hard work. As you work on assignments, document your work and the success metrics you create for your clients. No matter what happens in an engagement, these stats still hold true. Provide your clients with as much documentation / plans to go on without you as possible to make sure you set them up for success and to be able to continue after the engagement ends.
  4. Know your terms and conditions and be prepared to fight for your payments and your customer’s general negative feedback. Go back and review your contracts for payment terms and agreements as well as any non-compete verbiage that may exist in your contracts. While we hope we never have to worry about things going so badly, it is possible that the terms of your contracts will come to the fore when trying to break a relationship. By being informed, you can take steps to make the right choices and be ready to state your facts.
  5. Know when to walk away. If fundraising will cost you more than you earn, consider the opportunity cost, both financially and perhaps to your reputation. Never let your ego stop you from making smart business decisions that could affect your business in the short and long term.

Related: How To Deal With An Angry Customer

Again, the intention is not to get anyone to crash and burn without you, but to be able to professionally move away from engagements where mutual beneficence does not exist – and, hopefully, without. burn bridges if possible.

All of the above is not always easy to deliver or possible and does not guarantee an amicable breakup. But these tips will make it easier for you to do what’s right for you and your business, and it will also keep your customers going. Even after the bite wears off.

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