Why you need an engagement letter

December 22nd, 2010 BY Claire Moore

When I was doing research for my book, Jumpstart Your Bookkeeping Business, I spent a lot of time reading blogs frequented by bookkeepers. I’ll never forget the post from a bookkeeper who was seeking help in getting paid from one of her clients. She had been doing the bookkeeping for this person for almost a year without an engagement letter (contract) and was having a hard time getting paid. The “client” said that she had never asked for the bookkeeping work to be done and was still trying to decide if the service provided was adequate for her needs.

The replies were fast and furious in favor of dumping this so-called client. I was appalled that this bookkeeper would work for so long without getting paid. How does this happen? Well, when you’re starting out as a self-employed bookkeeper you tend to take whatever work you can get. The idea of getting a signed contract, also known as an engagement letter is farther down your list of priorities. You need to eat, so you need to make some money. You don’t want to scare off a prospective client with legalities. But here’s why that’s a bad idea.

First, look at my example. This woman took on what she believed was a legitimate client and worked for almost a year doing her bookkeeping. As far as I know she never got paid. First of all you need to have an engagement letter that details what work you will do and what rates you will be paid. You get the client to sign the engagement letter and you both keep a copy. At the first sign of nonpayment or changing of terms you whip out the letter and remind your client of the agreement. This is a quick way to reinforce the fact that you’re a professional and you expect to be treated as one.

You can read more about engagement letters and how to start and grow your bookkeeping business in my book Jumpstart Your Bookkeeping Business. Buy it now at Amazon.com. Go to http://budurl.com/jumpstartbookkeeping

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Why you need an engagement letter / Small Business Bookkeeping Network by is licensed under a