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Should You Hire a Software Development Company for Your Project?

Posted: 21 Nov 2019 03:00 PM PST

With the world becoming more and more technologically advanced, it has become imperative for businesses to have a digital presence. This is why the demand for experienced and adept software developers is on a constant rise. After all, businesses often lack the in-house capabilities offered by software development firms. Entrepreneurs are constantly looking to hire app development companies that specialize in the kind of project they require.

In this article we will be covering many aspects of hiring a software development company and why you need to hire one.   

How to find the right software development company

To start with, let's cover the struggles faced during the hiring of a software development firm. So many development firms are present out there, but it is tough finding the right one. It takes a lot of time to go through the appealing designs and sales pitches of development firms that claim to be experts in just about everything. One must not get distracted and instead focus to find the right development partner, who won't treat your software project as just another one.

Know that software development is a lot more than just writing code

Software development is not just about writing a long line of codes; developers are responsible for a lot more. The developers might impact revenue flow, content, brand identity and customer experience. When a software development firm is good, it will go beyond, crafting a useful product, contributing to design and assisting in the deployment.

There is intense competition in the software development space

Most of the adept and experienced software developers are in high demand, mainly in the mobile app development field. However, later on, many entrepreneurs become frustrated to learn that 60% of mobile coders delivered less than five applications, whereas 20% delivered between five and nine.

Demand for unique product & service

Every business wants an exclusive product or service that helps it stand out. After all, the market doesn't need similar products and it is foolish to imitate anyone else's product or service and expect similar results. Consider custom software development so your product will have individually designed features.

Software projects are expensive

Most software projects run over budget, usually by 50% or more. Usually, the cost range for an average project is $15,000 to $150,000, and an average project takes around 1,000 hours. This can become costly when the average hourly rate is between $50 and $400. Usually, software development outsourcing is thought to help reduce costs, but most development firms offering cheap rates are weak. And due to the many goof-ups on their part, the businesses end up paying more than decided.

Software outsourcing might fail

In the year 2012, owing to a failed software update, a myriad of RBS bank customers failed to access their bank accounts, and even the bank couldn't conduct any transaction for a few days. This demonstrates how critical software is. Unfortunately, 25% to 50% of software outsourcing projects tend to fail. The reasons could be many. For example, business operations could be out of sync with the project requirements or the specifications for the project could be inaccurate. Often the mistake is that software development firms outline documentation in hundreds of pages and then hire junior coders to just blindly follow these pages sans any creativity.

What to look for in a software development agency

There are a few basic things to keep in mind before hiring a software development agency. There are a few different types of outsourcing, such as:

  1. Onshore software development: These development firms are located in the same country and might even be in your own city.
  2. Offshore software development: These development firms are located aboard.
  3. Nearshore software development: These are the development firms located in neighbouring countries.
  4. Hybrid development outsourcing: These are the projects with onshore management and offshore or nearshore software development teams.

Each of these approaches has its pros and cons. Mainly the onshore development firm offers the best quality services, with face-to-face meetings. These are considered a good fit for short-term projects with large budgets. Offshore development, on the other hand, benefits firms that have clearly defined projects and are looking for more of a cost-effective solution.

Frequent communication and close collaboration is necessary

It is vital to ensure open lines of communication and close collaboration. You must convey your ideas properly and clearly and then offer regular supervision. A good relationship must be maintained with people you are working with. So, see to it that the development team is open to communication. Also when you interact with the team, there are chances of coming up with creative solutions & ideas.  

Set defined expectations and communicate them well

There are many ways to code the exact same thing, but entrepreneurs tend to be unaware of that fact. They often believe that a programmer is well-versed with every technology, but that is not true. There can be different tools, frameworks, coding styles and more that different programmers use. For this reason, it is crucial to take care of certain aspects while hiring a software development firm. Choose a company with a certain field of expertise, like a JavaScript development team, as they generally have a unified command of all processes. In order to pick the right technology, it is essential to know the functionality that you expect from your app. Start by simply having enough specifics regarding features, styles and layout for your software. This helps in knowing what type of firm you need to look for.

The more prepared and defined your project, the easier company selection and hiring will be. Your strategy can be defined by asking a question like: What is the purpose of your app? Who will use it? What platforms will it run on? Who are your competitors? What field will it belong to? Accordingly, a list of required features can be created and then you can prioritize them. You can even make an annotated design, outline UX, navigation, user flow and technical requirements.

Costs may vary

Next, you need to know what the cost will be. If you search on Google what is the cost to build a software of an app, you may find this general answer: "Apps that are developed by top companies might cost somewhere between $500,000 to $1,000,000. Then apps developed by onshore companies might cost somewhere between $150,000 to $450,000. In that case, you can expect a professionally developed application to cost anywhere from $100,000 to $500,000 and it is certain to take around four to six months."

Factors to keep in mind when hiring a software development company

What are the aspects you need to look at while hiring a software development firm? Once you sift through the Googled options and personal referrals, it is now time to create a list of 10 to 15 firms. Have a look at their websites for an initial assessment. Experience, projects, quality of content, expertise and more should factor into your decision. Pay attention to the red flags, such as complaints, lawsuits and bad reviews. Then study all the issues and see how those issues were resolved. Following this process, you can shortlist three to four firms. Then get in touch with them and request a quote for your project or idea. Finally, access their communication, expertise area, tech stack, staff questions and the current state of the company in order to choose the one that works best for your business and objectives.

Next comes negotiations and preparing a contract. It can even be a set of contracts, including: a masters service agreement (MSA), a non-disclosure agreement (NDA) and statement of work (SOW). Ensure to include a non-compete clause and intellectual property rights clause in the contract. Also, the payment terms should also be a centrepiece of all outsourcing contracts.

Ask the right questions

Once you have found the right software development company, there will be a lot of questions and communication taking place, where there could be a lot of buzz words and tech terms. There is so much to go through, such as people questions, process questions, business questions, schedule questions, as well as questions about technology, costs and more. The firm should take you through their entire development process in a manner that you completely understand it.

Tips to hire software developers

Here is the list of things you must know of prior to hiring the developers:

  • Define your requirements: What problem is your product going to solve? What will the exact duties of the developers be? What technologies and skills would be used? How much budget would be required?

  • Create a shortlist: Find a firm that does the type of work you need. For instance, a ReactJS software development or JavaScript development firm. Then have a look at their expertise and client reviews. Narrow them down and leave the ones that don't list the clients' references.

  • Time to negotiate: Organize  calls, personal meetings or whichever mode of communication works for you. Find what a firm offers in terms of your app project. Find out about their standards, their workflow and prices.

  • Follow up: There is no need to rush a decision even when everything seems fine. It is time to verify references, past work, learn about candidates, think through the budget, team arrangement and other crucial aspects.

  • Say "no" if needed: In case you are not fully satisfied or there are obstacles, then walk away rather than later regret having spent a great deal of money. There are numerous other development agencies out there and you will find one that best suits your requirements.

What are the benefits of hiring a software development company?

Focus on long-term client relationships. Huge resources are spent by software development agencies to find new customers. Thinking from the financial aspect, it works best for a firm to build trusted relationships with their customers and continue developing projects for them for a long time. These firms are constantly striving to build a strong reputation, so they make the best efforts to satisfy their clients and there is a low probability of any delays.  

In order to compete with the other software development agencies, each of the organization follows current trends and implements pioneering technologies, development standards and methodologies. Software development agencies are constantly evolving to maintain a high-level of produced software.

When a software firm is hired, there are a number of people involved in the development procedure. Also the requirements are documented, along with design elements, mockups and other crucial information. This means that even if the most unexpected events occur, the entire procedure won't be stuck. The development process will go on with the collected data and even if a development team member leaves midway, they can easily be replaced.

Software development firms are way more responsible compared to freelancers, and they work their best to deliver high-quality software to all of their clients. There is testing taking place at every stage of a project lifecycle, which ensures proper quality control of the final product. There are quality analysts in the firm who work on the projects from the start. This takes care of the requirements gathering stage and completion with the deployment stage. This kind of approach is helpful in creating user-friendly apps that meet all the requirements of your target audience. 

When a development firm is hired, there is a software development agreement between customer and development company, and this states the amount of confidential information that would come into the possession of software development firm. The agreement even mentions a list of deliverables that the development firm is supposed to achieve for the client. This kind of agreement assures that your software would be developed, designed and tested in a stipulated timeframe. This way there are fewer risks associated here, as compared to when you hire a freelancer.

Hiring a software development firm will work in your favour in every aspect and in case you are looking for software development services then get in touch to receive the most favourable results.

How Small Businesses Can Compete By Leveraging Data Insights

Posted: 21 Nov 2019 11:00 AM PST

  • Many companies still struggle to extract insight from their data.
  • Generally, as a smaller business you have the ability to be more nimble.
  • You need to treat data as a tool for growth, not a cost center.
  • Moreover, you need to focus on what type of insight will help your business to grow.

Over the past five years, big data, machine learning and artificial intelligence (AI) have become hot topics in the business world. Unlike the management fad du-jour, the capabilities of AI have transformed some of the most difficult and outdated business processes into highly efficient and profitable systems. But the gains from AI have also prompted widespread questions about whether fast-developing machine learning technologies can be applied to make small businesses even more efficient in other areas such as increasing sales.

Solving the problem of gleaning insight from data

Most organizations rely on AI to generate customized reports, data and customer insights. But their ability to measure, manage and control these efforts is limited. This is precisely why AI is still most often associated with cognitive applications and big data. Only a small proportion of new AI initiatives are aimed at companies' operational processes, such as processes that increase sales. This leaves plenty of opportunity for real-time data optimization, more effective sales and reduced costs.

Until now, business intelligence has largely been the realm of the "smart humans" that think their way around spreadsheets and databases. But AI offers a powerful and easy-to-use way of capturing and showcasing this data.

The challenge is that the amount of data available is vast. And despite the movement toward open source database technology, when it comes to data analysis it's the proprietary (and mostly unavailable) company-created data from big businesses that customers flock to. This is particularly true for customers with big data programs. And much of the data in the systems big data companies have developed  will become very expensive to maintain as those companies mature. A small company, though, can save itself some money by embracing big data and doing its own analysis.

This is particularly true of small companies that are struggling to take advantage of the tools already available. But it's also true of the biggest companies that are joining big data adoption because they realize that they are missing a great deal of competitive advantage. Small companies aren't the only players who might benefit. Big companies need to start thinking about how big data can add value to their own businesses. But they need to wrap their heads around what this data will mean for their company.

Small businesses gain an advantage in being nimble

Companies need ways to mine and interpret all the data they collect, while simultaneously improving products and services, acquiring leads and converting prospects into paying customers.

However, for many there is the internal obsession with controlling everything and ignoring what is right in front of them. This lack of a clear business strategy leads to endless consultations, disagreements and wasted resources. Many organizations that are already equipped with AI tools often fail to make the most of them.

Smaller companies face significant challenges when developing AI technology, due to the relative challenge of digitizing disparate processes. Many small businesses struggle to overcome the time and cost of human interaction to simplify, and potentially automate, their operations. However, when used in conjunction with data analysis and data visualization, these tools can assist with understanding a company's processes and trending to establish a greater understanding of the business.

Companies need to understand these challenges, establishing innovative, open and effective techniques while building internal community. This approach doesn't take long. Once you've set goals and set some expectations, you're well on your way to taking advantage of data in your organization.

Treat your data as a driver of growth, not a cost

There is plenty of evidence that companies that invest in big data reap a lot of benefits. After all, the opportunities presented by analysis of customer data can be profit-boosting or even life-saving.

You can understand why companies might want to think of big data and technology as a service. This is typically true even for startups that might not yet have a product or know exactly what  they have to offer. Start-ups simply have less capital to invest in the technology and services required to deliver on their innovation.

For those companies, investing in technology is also an act of belief in their ability to deliver on that promise. Technology should eliminate a lot of the tedious and costly manual conversion and supply chain optimization work so businesses can focus on creating awesome experiences for their customers.

Any kind of big data effort needs to look at the data it has already collected to understand what trends and causes it has already identified, spot new possibilities, determine correlations and understand possible outcomes. This approach allows marketers to better understand consumer behavior, preferences and emotions, but anyone in business should think about the opportunity it affords.

That means having a hard conversation about how to maximize the potential for the information you have created. One of the first questions you should ask yourself is whether big data is really a service or technology. This is a pretty good indicator of whether the company itself will benefit from it.

In a competitive industry with legacy companies encumbered by technology, AI powered platforms promise to save on data protection and load dramatically. Achieving digital transformation takes money, time and a keen eye. AI enhanced software products gives us advanced capabilities such as machine learning, not only to create smarter offerings but also to expand partnerships and enhance our overall service offering to our clients.

Beginning with Business Intelligence

Business Intelligence (BI) is about data and information, but interestingly, the technology behind it is often overlooked. What's still missing is the ability to understand how a business is using its data in real time and incorporate this insight into the system so the business can quickly make decisions. A company's transactional systems provide a valuable data base, but this is raw information at best. And the BI systems that work with these systems often don't really create value out of them.

Business intelligence is one of the most important tools that can help employees navigate through the complex organizational challenges which arise in their daily work. They are able to analyze large amounts of data while unearthing useful insights from the data available.

Business intelligence is therefore a great way for employees to gather the information they need to make smarter decisions throughout their day. It is far more accurate, in that regard, than mass search engines, which present pre-determined search terms and results. This means that both employees and managers can make sure that they make the right decisions with their business and earn the right to work.

With machine learning (ML), we're finally getting to the point where a system can understand the business context and preferences of an organization. This will help identify when an employee's behavior is potentially impacting the business and the systems needed to work in concert to prevent it.

The good news is that ML systems are getting cheaper, and these are some of the fastest moving trends in tech, enabling BI systems to handle more data in minutes. Technology companies like Microsoft and Google are making strides in adding this capability, as are BI vendors like Salesforce and ServiceNow, by building learning into their systems and even the underlying data pipelines.

Your CRM as a window into the customer's thoughts

Customer relationship management is a huge industry in itself. Companies spend billions on a wide range of CRM technologies: people, systems, tools, processes and, of course, humans. And when they spend money, they want to know where their money is going, what options are available and how effective they are at driving customer acquisition and retention.

By the time companies move from having to manage their own existing and newly acquired data, gathering social media profiles and to AI customer success functions, they have a wealth of information that they never knew they had. This includes customer interactions to date, of all kinds. This can provide a large trove of valuable insight.

Getting started with data insights

If you have data that you can access, you're already halfway there. Now you just need to figure out exactly what types of insights will help your organization. For instance, you might want to learn more about how many customers developed a knowledge of your product after the initial purchase and how the organization was able to retain them on your platform. Additionally, if you're going to be communicating data to your stakeholders and customers, your people need to be able to access those data sets and use them in various ways that fit their functional styles and expertise.

Creating a template for your organization may seem like a simple process, but make sure you're working with the right tool to do so. Starting a project of this kind will also require a test, which is an important part of the planning process. Use a test drive to see how the software performs over a specified time period and scope of time. Whatever tools you use, make sure to use an amount of experience, determination and patience which will enable you to properly analyze and respond to the latest movements in the market.

The next big thing for your data

There's an aging workforce and a generational divide that does not feel conducive to the need to catch up with the pace of innovation. To really speed up the change curve, you need to provide better outcomes for training and retraining the workforce.

The world of software development and architecture will need to move faster than currently thought possible, so businesses will need to have an increasing level of technical expertise among their employees. There is also a growing demand for people to understand the role of data scientists, so that the organizations that hire them can plan accordingly.

Companies that harness the power of machine learning to transform the way they collect, analyze and present large amounts of data should be rewarded with better insights.

How to Network for Business

Posted: 21 Nov 2019 10:00 AM PST

  • Get comfortable getting favors from people you already know before you network with those you do not.
  • Understand your networking target and frequent places/events where they most likely are.
  • Upon first meeting the target, the relationship (and not what you need from the target) is the goal.
  • Balance courting and pitching according to how many pitches the target receives.
  • Collaborate for mutual value, and always lead with their benefit.

"What if I could give you the genie's lamp?" my uncle asked after watching Aladdin at the family movie night. 

"It's all made up. The lamp doesn't exist!" my cousin remarked. He had the cynicism of adulthood seeping into his teenage years.

"There are actual genies that walk among us," my uncle kept a straight face. I did not know if he was being serious or not, but I was open to seeing where this was going.

"Okay, tell us about it," I demanded.

"First, Ibrahim, you tell me what are the two reasons Genie could grant Aladdin's wish?" everyone was looking at me.

"Because he had magic, and Aladdin had the lamp," I replied confidently.

"Yes, but look at it this way," he continued, "magic is ability, and the lamp made him willing to help Aladdin." He examined the expression on our faces. We didn't follow the point. "Kids, in other words, the two reasons he granted the wishes was because the genie had, one, the ability to grant wishes and, two, the willingness to grant them."

"Okay, and?" my elder cousin was drawn in. "You see, you don't need genies because there are people here who have the willingness to help you and the ability to help you. You find these people, and your wishes are granted."

"How do we find them?" I asked. "You simply ask."

"Wait! I am not asking around, what if they say no?!" my cousin protested.

"Well, if I gave you three lamps and said one of them is the magic lamp, would you not rub them till you found the magic lamp?" my uncle could see he had driven the point home. He continued, "Anyway, my point is that you gotta ask till you find the magic lamp, and what's the worst people will do? Refuse to help?"

The allegory of the magic lamp and business networking

The allegory of the magic lamp has remained with me ever since. I have never hesitated to ask for help where needed. How often people are willing to help is astonishing. But this cannot apply to business, can it? What if I told you that a multi-billion dollar business attributes over 30% of its annual revenue to this principle? When you go to McDonald's and order a big mac, what does the cashier ask? "Would you like fries with that?"

They want you to spend more, so what do they do? They ask you to spend more. This technique is called an upsell. Upselling is simply the act of asking your customers to buy more. It is up to them if they do. But the number of times they are willing creates a significant revenue bump. We also apply this principle with suppliers. Ask your suppliers if they are willing to give free samples or any other value adds. You could also ask for a reduction in prices. It is surprising how many suppliers are prepared and willing to go forward with it.

I must add, though, that the principle works on reciprocity, and you have to be willing to help where you have the ability when you're asked. Otherwise, your approach towards seeking help will seem too selfish and will repel people. Once equipped with a reciprocal (but not transactional) mindset, you are ready to network. Only after being able to ask comfortably for favors from people you already know will you be able to make use of any networking.

Increasing positive networking outcomes

Once you are comfortable asking for and providing help, you must come across people with whom mutually beneficial ventures can be explored. Just like you must keep the ideal customer in mind, you must start networking with the perfect person in mind. Is it an artist, designer or engineer you want to come across? Maybe it is another business owner who is in a specific sector?

The next step is to list down possible places and events you are likely to run into people that match this description. Many business owners get this far. Where they fall short is that they dive into networking with a business-first mentality and take the seductive subtlety out of it, which is the sign of an amateur and is met with rightful rebuke.

The master networker increases the likelihood of running into the right people. But upon meeting these people, he makes no mention of what he wants. The relationship is senior to his needs. He only focuses on building a relationship. And since his goal is a relationship, he makes no mention of ulterior motives. At least upon first meeting, the only thing he wants in his prospect's head is, "I would like to know this guy for a while." If the networker has achieved this, he has won even without any apparent exchange of value.

Once connected, lead any conversation about your interests with their interests. For instance, if you are looking to use an artist's design for a product you are about to launch, asking them if they would like their art across multiple billboards would rather than starting with your product idea.

Leading with their benefit is so powerful that it works even in the absence of a relationship. Messaging a journalist "I have a newsworthy exclusive for you" is going to get a response quicker than "my business is doing this, that and the other." 

Balance relationship-building with value seeking

I would recommend you strike a balance between courting and propositioning, directly from an assessment of your prospect's time. If you want to work with an influencer who gets a few thousand requests every month and works on a few hundred collaborations, it is quite evident that he or she is not looking to be courted the same way as an artist who has yet to be approached by more than ten people. Ultimately, you look at the number of collaborations they do  to understand the required level of relationship needed before proceeding with a project.

Start with one collaboration per month as the standard for one real-life friend's level of affinity. If someone does one collaboration a month, or less, you must be a friend before they collaborate comfortably. If an individual collaborates twice a month, on average, you can be equivalent to a friend of a friend or half as close as a real-life friend before approaching them for a collaboration. This equation is carried forward to its logical conclusion, where someone who collaborates once a day or more, requires you to only lead with their benefit and make a proposal in the absence of any previous relationship.

Establish joint ventures through networking

Understanding how to get people to agree to collaborate is, of course, not all it takes. You may already have a network butt have not yet collaborated with anyone. What is missing is the collaboration idea. So we need to explore that.

First, you must not collaborate for the sake of collaboration. You have to be serious about collaborations benefits to you, and only then can you be serious about the benefits to your partners. I have spent days tailoring partnerships with my clients, and each business is in a unique position to leverage the owner's network and other factors that vary. There are, however, universals, which are an excellent place to start.

Fuzail and Hasham, names changed, were my neighbors when I stayed in Jumeirah Beach Residence. At one party, we discussed how we all found our partners. It turns out Fuzial's wife was Hasham's childhood friend. Hasham's fiance was Fuzail's best friend. Hasham set up a blind date between his friend and Fuzail. They hit it off and the rest is history. About a year after that, Fuzail's best friend saw Hasham in group photos and found him cute. When she asked Fuzail, the guy vouched for Hasham. His friend met Hasham, and they started dating.

While everyone at the party swooned over this, I could not help but deconstruct it. What had happened, unintentionally, was that reach and credibility were exchanged. The blind date was Hasham lending his reach and access, while vouching to give Fuzail credibility. This phenomenon occurs every day in business.

Most businesses have regular customers whom they reach and are credible in their eyes. Two businesses with similar, non-competing products, can collaborate. For instance, if yours is a fashion store and you have a jewelry business owner as a friend, you can arrange a collaboration where you place their jewelry in your store and take a percentage of the profit on the sale. This arrangement is called a consignment. The jewelry brand could give away vouchers to your store and, upon redemption, make a percentage of the sale.

Generally, all collaborations leverage existing trust, credibility and reach. A business's reach is not just related to customer data; it includes the means to communicate with them. Today, that occurs via email and phone; tomorrow that might change, but what will remain constant is that businesses must have the means to reach their regular customers. By deciding a complementary scheme, companies with audiences of similar interests and size can drive up business.

Two businesses don't need to have similar products for this arrangement. I had a furniture store client collaborate with a real estate business. It is a fact that real estate customers are interested in furniture and people who buy furniture have homes.That is what made the collaboration possible.

For products and services with a small sales cycle, timed promotion works wonders. One of the grocery store chains I worked with collaborated with neighboring restaurants. Each branch partnered with a separate restaurant. The grocery would give a 25% off voucher to the restaurant if they got the customer's number and name. The restaurant would offer 25% off to the grocery for the same information. This is how we increased sales for the month by 80% for the restaurants and 120% for the grocery stores.

This is not to mention the fact that all businesses involved now had a database that they previously did not. For the first time, these businesses had a relationship with their customers. What I got out of setting up these collaborations was access to restaurant owners, and two became clients. This arrangement, quite literally, was a win-win all around for everyone, including customers. And to make it happen, I followed all the actionable steps mentioned in this article. I hope the advice is as fruitful to you, as it was to me.


 

What Every Good Credit Application Should Include

Posted: 21 Nov 2019 06:00 AM PST

If you're providing a service such as marketing or technology, a credit application might not seem like an obvious need. But anytime you perform work for a client before you're paid, you are in fact loaning the client money. Before you loan your clients money, make sure they fill out a credit application. 

A credit application has three main purposes:

  • To evaluate your customer's creditworthiness.
  • To establish terms with your customer.
  • To provide protection in case your customer defaults on the agreement.

You don't want your credit application to be too lengthy, especially if you are also going to have a contract, but to be effective your credit application needs to have certain key elements.

Information to evaluate your customer

To evaluate your customer, you need some basic information. This should also include information you might need if the customer becomes delinquent. For example, instead of only collecting the contact information for accounts payable, also collect contact information for the owner or senior management, depending on the size of the company. The more phone numbers, cell numbers and email addresses you have, the better.

The most basic information to collect is the name, address and phone number for the company and any parent companies. You will also want references and bank information. Performing a basic check of any information given can prevent you from doing business with a fraudulent company. You would be surprised at the number of companies who do business without first confirming even the most basic information.

Establishing terms with your customer

It may be obvious, but all too often I've seen clients who did not have any written terms of agreement with their customers. Without something in writing a customer can claim that the salesperson told them they could wait and pay until a certain date, or that they wouldn't have to pay if they were unsatisfied with the services. If there's no other written information, the law might allow the terms on your customer's purchase order or their claims of a verbal agreement to decide a dispute.

There are seven terms that your contract should include:

  1. A binding agreement. This lets the customer know that the document they're signing is a binding agreement, not just an application.
  2. Authorization to bind company. This states that the person signing the application has a right to do so.
  3. Information is true. Hopefully, if someone lies or misrepresents themselves on the application, you'll catch it. But if not, this term makes the person who fraudulently fills out the application legally responsible for the information they provide.
  4. Right to investigate. Legally, you cannot run a credit report on someone without their permission. This term gives you that permission.
  5. Vendor's sole discretion. This is like the "we have the right to refuse service to anyone" sign you see in the window of restaurants. It clarifies that just because the client fills out the application, you don't have to do business with them.
  6. Applicant owes vendor. This is another one that seems obvious, but it simply states that the customer will owe you for any goods or services.
  7. Primacy of form. Purchase orders, contracts, emails … there are so many different ways to communicate and make agreements with clients. This term states that your credit application is the ruling one. If you include this clause (and even if you don't) make sure any terms stated in the credit application are the ones you want to use.

Terms to protect you in case of defaults

As a collection agent, these are the terms that I am most interested in. These provisions can give you a lot more leverage when dealing with delinquent accounts and might be enough to put your invoices at the top of the debtor's pay list. There are six terms you need to include in order to protect yourself.

  1. Personal guaranty. Not everyone will agree to this, but that doesn't mean you shouldn't ask. Sometimes people agree to it simply because it is in the application. A personal guaranty means that the owner of the company takes personal responsibility for the debt. This doesn't mean you will necessarily be able to recoup money if the company goes out of business or the owner stops paying on invoices, but it gives you a better chance. A personal guaranty will give your invoices priority over other vendors who did not get a personal guaranty.
  2. Interest and acceleration. These two elements can be listed separately or combined into one clause. Basically, you want the right to collect interest on past due invoices. Acceleration means that once any invoice is overdue, you can demand that all invoices or the remaining contracted amount be paid immediately.
  3. Collection costs and attorney fees. These terms state that if you have to go to court or a collection agent in order to collect the money you are owed, the client is on the hook for the fees. You want to make sure you include "collection costs" in this term so that your collection agent can use this as a negotiation tactic.
  4. Litigation vs arbitration. Many people believe that arbitration is better than going to court. Arbitration is seen as a quicker process. But as a collection agent, I recommend having a clause that states that you have the right to go to court. Because you have to pay the arbitrator for their time, out of pocket expenses for arbitration are always much higher than the filing fees associated with going to court. Arbitration does not give you the same ability to do discovery as you have in court proceedings. The discovery process is very important if your customer is disputing the balance, especially if the customer is lying. Finally, if you have a lawyer willing to work on a contingency basis (as they often are for collection issues) there is no difference in the costs of lawyer fees. Make sure you fully understand the difference between litigation and arbitration before signing any contracts.
  5. Home field advantage. This clause states that if you have to sue, you have the option to do so in your own backyard. For collection cases, it is less expensive to sue where your customer is located. But if there is a dispute, it can be very advantageous to sue where you operate, making it harder for your customer to defend the lawsuit. Having the option as to where to sue gives you more leverage in negotiations.
  6. Jury waiver. It's very unlikely that your case will go to trial, and even less likely that it will involve a jury. But, if it does come to that, you might prefer to have a judge decide the matter. Juries can be swayed by emotional arguments that have nothing to do with the facts of the case.

A good credit application is just one element of due diligence and good record keeping. Make sure to check any terms you've included on your credit application against any terms written on your contracts or invoices. If your terms differ it can cause confusion and prevent clients from paying their bills. Not every client will agree to every clause or term in your credit application; that's alright. You can evaluate each situation as needed and remove clauses if you feel comfortable doing so. If you are the one filling out a credit application, make sure to read it carefully so that you fully understand any terms you are agreeing to.
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