For accounting professionals, there aren’t many phrases scarier than “scope creep”. Many things can cause scope creep, but essentially it boils down to doing more work than you’re being compensated for. It can be difficult when originally outlining a project to predict how large it will become. Underestimating the time or effort that it will take to complete certain tasks, however, can eat away at both your time and your bottom line. Likewise, clients who expect more work than you bargained for can be detrimental to your business’ success. 

A solid engagement letter can be your ticket to preventing scope creep at your firm. But what is an engagement letter, how does it help, and how can you write the perfect one?

What is an Engagement Letter?

An engagement letter is a contract that defines the scope of the services you are providing to a client. Engagement letters also outline what your professional relationship looks like. For example, these letters can outline your client’s responsibilities in addition to your own. The engagement is not only part of your sales process and client onboarding, it is also a legal document that can protect you from future trouble. 

Engagement Letters and Scope Creep

Your engagement letter is your first line of defense in preventing scope creep. It’s where you outline the depth of your work and the time you will spend doing it. Having this outline is vital when it comes to explaining to your clients why you cannot do additional work for them outside of your initial agreement. Renewing this document annually also allows you to regularly review your engagements and identify any scope creep that could be eating into your bottom line. 

Writing Your Engagement Letter

In order to best protect your business from scope creep and any legal trouble that may arise, you have to ensure that your engagement letter is accurate and thorough. If you need a place to start, there are plenty of templates out there that can serve as a jumping-off point. There are, however, some key things you’ll want to make sure your engagement letter includes. 

  • Naming of involved parties: It is still a contract, after all.
  • Scope: This is the crux of your engagement letter and the true key to preventing scope creep. When outlining the scope of your work, you’ll want to be as specific as possible. 
  • Cost: When, how, and how much will you be paid for your services? What happens if an invoice is not paid on time?
  • Client’s role: What tasks and deadlines is your client responsible for? 
  • Time frame: How long will the engagement last? Also, consider renewing your engagement letter annually to account for increases in your prices. 
  • A breakup policy: Sometimes, things just don’t work out. Be sure to outline in your letter what will need to happen if your client decides to terminate the engagement. 

 

Scope creep doesn’t have to creep up on you — not if you have the right tools in place to protect your time and money. Once you have your engagement letters drawn up, don’t forget to consult a legal professional.