Customer Agreements

What are Customer Agreements?

A customer agreement outlines the terms and conditions that govern the use of your company’s products and services by your customers (B2B and B2C), along with the payment details.

A customer agreement is a legally binding company contract between your company and customers, specifying the terms and conditions for using your products and services. It outlines the expectations and responsibilities of both parties on parameters such as type of products and services offered, confidentiality of your information, specifications, pricing and payment, penalties, performance standards, and dispute resolution methods.

The agreement seeks to regulate the extent of the liability of your company in case of litigation, and also ensures that you receive regular payment from customers.

Why are Customer Agreements important for business today?

Having an up-to-date and comprehensive collection of customer agreements enables your company to:

• Mitigate the risks related to the performance of your products and services in case of a lawsuit
• Facilitate timely and accurate receipt of payment for the products and services provided
• Safeguard interests in case of termination of the agreement or legal dispute
• Safeguard confidentiality related to the offering’s specifications to protect business processes and trade secrets
• Provide better products and services to your customers by reviewing and understanding their purchase behaviour

Why is it important for an event tomorrow?

Having an up-to-date and comprehensive collection of customer agreements is important for an event tomorrow, as it helps potential investors to:

• Assess and analyse your customers by segment and their contribution to business growth
• Forecast future earnings by leveraging historical cash flow trends from previous agreements
• Evaluate recurring revenue streams of your company
• Accurately value your company

Pros of addressing Customer Agreements

• Protection against liabilities and business risks that may lead to penalties and litigations
• Visibility on renewal and upscale opportunities to grow your business
• Ability to recognise high value customers through purchase history analysis
• Inclusion of effective and quick dispute resolution methods to protect your company from risks of negative press and litigation costs

Cons of not addressing this topic

• Increased potential for non-compliance with contractual obligations due to a lack of tracking
• Increase in the risk of disputes and/or litigation caused by undefined requirements, expectations and scope of offerings
• Additional time and cost associated with due diligence for both management and potential investors