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How to handle a client who wants to cancel a contract 

Dealing with a cancelation of contract from your client isn’t ideal for any business owner. But luckily, it’s a much easier situation to handle when you have clear contracts and processes in place for moving forward. Learn how you can protect against cancellations and handle them with ease.

business owners considering how to deal with a client that wants to cancel

It’s every independent business owner’s dream: to have a roster of clients who you love to work with and hopefully, who love working with you, too. Working with your ideal clients makes your job so much easier and more enjoyable.

No matter how great your clients are, the reality is, you’ll have to cut ties with some of them in your business lifetime. Maybe something huge and unexpected comes up ( lookin’ at you, COVID-19). Maybe they have cash flow issues, or you realize you’re both looking for different things.

Whatever the reason, you’ll likely have at least one client who wants to cancel a contract with you at some point. It helps to be prepared for that situation before it happens. Here are some tips on how to handle client contract cancellations: 

What role do contracts play in cancellation?

What happens if you don’t have a contract and a client wants to cancel? Not to be a Debbie Downer, but you may be SOL (simply outta luck), my friend. I can’t say often enough how important it is to protect your business with contracts

Contracts protect both you and your clients, set boundaries, and lay out all your ground rules for your working relationship. Without a contract in place, you can be terminated instantly or even miss out on pay.

Contracts establish the boundaries, expectations, and obligations between two or more people (parties). Anyone who works with clients needs a contract. In a business relationship, your contract:

  • Removes fear from the equation Your clients are not afraid of a contract; they understand that it’s a basic part of a working relationship. In fact, they’ll probably be more afraid if you don’t have a contract, and they might think they’re taking a huge risk by working with you without any protections in place. 
  • Establishes expectations for your relationship – This might be your client’s first time working with a business like yours. Clients often have no experience with a service provider’s work or process, and they might feel left in the dark without a contract that explicitly states what to expect of you and how they can get the most out of their investment.
  • Sets clear boundaries when it comes to numbers – This includes the time you put into each project, the number of sessions or meetings included, money owed, when deliverables and payment are due, etc. Get clear on all of it in your online contract
  • Safeguards your resources as a business owner – Contracts help you prevent scope creep. Also known as, clients who try to get more from you than you may be willing to give. They want increased access to your time, which puts you at risk of spending more of your money on team support, product, etc. that you hadn’t initially factored into the price of the project. 
  • Establishes liability ahead of time – Think about the pandemic. Events were canceled and it was nobody’s fault. Luckily, our contracts had clauses like force majeure to protect against cancellation and refunds, which helped both parties be released from the agreement without a huge fight or legal drama. It removed emotion from the equation and made it very clear-cut. With a contract in place, no one can claim they didn’t know what would happen. 
  • Acts as a legally enforceable “scapegoat” – Have you ever had to fight with a client or customer over deliverables or payment? With a contract, it’s not a ‘he-said-she-said’ thing. It’s what the contract said: it protects both you and the other party.

Check the terms of your contract

Okay now, let’s say a client wants to cancel on you ☹️. But if you do have a contract, you can breathe a sigh of relief. Why? Because you’ve clearly laid out terms on things like:

  • Giving notice – Does your client want to bail two days before a deadline? Or are they giving you the required two weeks’ notice for canceling?
  • Pay – Is there a clause that says they have to pay up for any work you’ve already provided?
  • Final deliverables – What does your client receive in the event of cancellation?

Instead of panicking because a cancellation means you lose out on money or have to deliver assets on a ridiculously tight deadline, you can calmly point to the contract and say, “You’ll still owe $XYZ, and I’ll have ABC deliverables to you by X date.” 

Of course, we always hope it doesn’t come to fight over the details of a contract. Instead, if a client wishes to cancel, there are a few other things you can do before sending the final cancellation notice or deliverables: 

Try to fix the issue before canceling

Ending a professional relationship is no fun, especially if a request to cancel comes out of nowhere. However, it may help to think of it as working with your client rather than butting heads against them. 

Try to understand your client’s reasons for wanting to cancel. Who knows, maybe you can come up with a plan together for solving an issue instead of canceling outright. You may be able to reschedule your services to a different date, change up payment terms, or restructure your agreement so you can continue to work together.

Don’t burn any bridges

How you handle a cancellation is just as important as your cancellation terms. Be firm but still friendly when discussing your contract or negotiating a different agreement. Keep things professional and check your emotions at the door. Your client may want to come back to you in the future.

The only exception: your client treated you with disrespect, tried to get out of paying you, or made unreasonable demands of your time or services. If that’s the case, you have no obligation to salvage the relationship. Sometimes you just have to walk away and move on.

Rely on your contracts and let go of the rest

Ending professional relationships on good terms takes work, but your contracts should do some of the heavy lifting for you. They should remind your client of their obligations, and you can also use them as a jumping-off point for restructuring or changing your agreement.

Remember not to take cancellations personally. Sometimes the best thing is to just salvage what you can and then let it go. That way you and your business can continue to grow and thrive.  

Handling cancellations with a cool head is part of good client management, and its just one of the many hats you probably wear as an independent business owner. 

For more tips on managing your client relationships, particularly when business slows down, head over to The Contract Shop® blog, where we share even more resources on growing your client base, navigating sticky situations, and thriving as a business owner! 

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