How to use your legals to boost profit

Today we're exploring something most business owners don't realise: your legal documents aren't just protection, they're profit tools. Properly crafted agreements don't just protect you; they convert prospects into paying clients. When your contract is on brand and aligned with your business processes, it creates a "hell yes" moment that reinforces your client's decision to work with you. If your agreements feel like generic legal documents rather than an extension of your brand experience, you're missing a real conversion opportunity.

In this episode, we're looking at how clear payment terms create predictable cash flow that allows you to plan and grow strategically, rather than chasing invoices or having awkward money conversations. I'm also tackling scope creep - one of the fastest profit killers - and how explicitly defining what's included, excluded and how variations work protects your margins and ensures you're compensated fairly for your expertise.

If you're unsure whether your legal agreements are actually contributing to your business goals or just sitting in a folder as basic protection, this episode will help you reassess. A legal upgrade can transform your documents from passive safeguards into active strategic assets that support smoother operations, better cash flow, and higher profit margins. Book a chat via the link in the show notes if you're ready to bridge the gap between basic legal protection and strategic frameworks that actually support growth.

LINKS:

Episode Website:  

https://www.tmlegalatelier.com.au/rise-up-in-business-podcast/how-to-use-your-legals-to-boost-profit

Sign up for my fortnightly Atelier Briefings here

Check Your Legals with the Essential Legal Checklist here

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Transcript

[00:00:48] Tracey: Hello everyone and welcome to the first episode of the Rise Up in Business podcast for 2026. I hope you have had an amazing restorative break and you are ready to hit the ground running and build momentum in your business for the new year. If you're a longtime listener of the podcast, welcome back and if you are new, thank you for joining me. I'm so happy you are here. I talk a lot about the importance of legal documents and why you need them to protect your business and to set you up for success and all the things and you can listen to so many of my episodes where I dive into different areas of your legal documents.

[00:01:25] I talk about what you need and why and how. All of that. In today's episode, I want this to be a short and sharp energy injection, whereby I'm gonna just dive straight in and talk about how you can use your legals to boost profit at this time of year. I find that business owners are really focused on tweaks that they've made last year, consolidating changes that they've made. They're focusing on a fresh start, a new slate. We wanna bring in profit, we want more revenue, we want growth, we want all the things. So let me share with you [00:02:00] how you can use your legal documents to boost profit. I'm gonna talk about three key ways that I work with business owners to do exactly that.

[00:02:08] The first is invest in contracts that convert prospects to paying clients. Let's just be really honest here. Your documents are more than a boring legal document that someone's put together for your business. If your legals are tailored properly for your business, they should be helping convert prospects to paying clients and by legals, for the context of this podcast episode, I'm talking the documents you use when you are providing services to clients: your design agreement, your coaching agreement, your consulting agreement, terms of service.

[00:02:42] Whatever that looks like for you. If that document is tailored properly for your business and you know how to use it, that document should be the most powerful tool your business has. What it should do, well above and beyond legal protection foundations, is help convert prospects to paying clients. It should be on brand.

[00:03:05] It should look like you. It should sound like you. What it should be is an extension of the client journey so far in your client journey experience. What I mean by that is when a client reaches out to you, how do they connect? Is it social media? Is it your website? Do you have a discovery call or a clarity call?

[00:03:25] What's the process? Because somewhere in there, one of the steps will be presenting your terms and conditions or your client agreement to your hopefully new client, your prospect. That process needs to be seamless. If it is, it's an extension of the touch points. So by the time the client receives your beautifully tailored proposal or your quote or your service agreement, they've already spoken to you.

[00:03:50] They know a bit about you, they're already on the journey. So when they receive this agreement, it's a continuation of that journey. The language is the same, the experience is the same. [00:04:00] It's all on brand. What we then want is to make sure that that agreement is so clear and transparent in the way you work, what you'll be delivering, how you'll be delivering it, all the things that by the time the client gets to the end of reading it, it's a hell yes to wanting to work with you.

[00:04:19] That's what I mean when I say your client agreements, your legals need to help convert prospects to paying clients. You want them to say hell yes to working with you, and they should if the agreement is tailored properly for your business. So when I say invest in contracts that convert prospects to paying clients, this is part of what your contracts should be doing, your client service agreement, your terms of service, this is what they should be doing.

[00:04:45] What they shouldn't be doing is be so disjointed from the experience that prospect may have had with your business that you've presented them with a document that's either 60 pages long that looks like a boring lawyer from the sixties has drafted it and no one needs that in their life. Or it's so short, you've got a template or you've used somebody else's or you've piecemealed something together, that it's sending the wrong message.

[00:05:11] It's sending the message that you are lacking professionalism, you don't really know what you're doing and that you've just bootstrapped it together. No one is going to be saying hell yes after reading that. So taking the time to make sure your contracts are an extension of your business and they are a continuation of the client journey with your business is worth its weight in gold.

[00:05:33] 'cause that my friend is when you get that hell yes to clients wanting to work with you. So that's the first point. Invest in contracts that convert prospects to paying clients. The second way to use your legals to help boost profits is to master your payment terms for predictable cash flow.

[00:05:52] So what I mean by that is when you've got your beautiful contracts that are drafted for your business, it aligns with how you actually [00:06:00] do business. Your payment terms are consistent with how you operate. So clients know at the outset what's expected. So if you are a designer, do you require a non-refundable deposit or a booking fee?

[00:06:12] Do you work in stages or phases? When are you going to issue your progress payment invoices to clients and when will they be expected to pay? What happens if they don't pay? Are you going to pause the job? Will you charge interest? What happens? Those payment terms and the consideration to all the things is really important.

[00:06:30] If you're a coach or a consultant, when do you ask your client to pay? What happens? Do they need to pay you a deposit to secure their first session for example? Do they need to pay a progress fee or a stage fee to lock in the first group session where you go to scope the services? There's so many different ways of doing it.

[00:06:52] But in my experience, if you use your client agreements to set out how the payment side of things is going to work, and you actually operate the way you say you will in accordance with what's set out in that agreement, you are setting yourself up for success every time because your clients will know when to expect your invoices and what your payment terms are.

[00:07:15] So you significantly reduce the risk of unpaid invoices and delayed payments, which impact on your cash flow. When things impact on your cash flow, we all know what that means is that you are backpedaling then trying to work out how am I gonna pay this? What am I gonna do with that? And then guess what?

[00:07:33] Your eye is off the ball. You're not focusing on delivery, you're focusing on these little issues that could have been avoided. We wanna make sure you are getting paid on time every time and that goes straight to the profit margin because invoices that you have to write off hurt the profit margin.

[00:07:48] Spending time not in delivery, but instead chasing invoices, chasing clients, wanting to know what's happening, not in delivery, not revenue generating. So it [00:08:00] all links back to the ability to use the documents to boost your profits. The key here is to make sure you are clear, and to make sure that you operate the way you say you will.

[00:08:13] It is no good having payment terms in your client agreement all set out really clearly but then you don't issue the invoices when you say you will because I've seen it so many times the minute a business diverts from how they say they're going to operate in their agreement and they do something different, the client then thinks, Hmm, they don't take it so seriously. Well, I won't either. Hands down. It happens so often you'd be surprised. Well, maybe you wouldn't. But the minute you stop doing what you say you are going to do in your agreement, the client then has less respect for those boundaries. So if you have really clear payment terms that support your business, which set out when payments are used, and make sure the language is consistent with the language you use in your day-to-day. Is it progress payments? Phases, stages, deposits? What is it?

[00:09:04] Monthly? Whatever it is, have it in there. What payment methods will you accept? Do you wanna set out how they're supposed to pay? What is the deposit structure? What's the re refund structure? What are the interest provisions? Are you gonna charge interest? If so, when? How? What's the basis for it? Are you going to stop work?

[00:09:25] Are you going to terminate? is the client going to incur a delay in their project? Are they going to lose the date that they'd secured for your delivery? Whatever it might look like, set it out in the agreement really clearly and you will be so pleased with the ripple effect from that because with clarity comes consistency and if your client is clear on what's expected of them in terms of payment and if you are clear on how you operate and then you actually operate the way you say you will, you will get consistent cash flow in your business.

[00:09:59] Number [00:10:00] three, set boundaries that protect your profit margins. We don't need to work for free and scope creep is real and I'm sure that so many business owners listening to this and nodding along going, oh my gosh, Tracey. Yes, scope creep is real. It doesn't have to be. In my experience, scope creep is one of the biggest killers of profit because when you have a situation where there has been scope creep, what that means is there hasn't been a clear method of communication with the client around the services, the boundaries around those services, when a variation will occur and how to charge for those variations. Too many times I have clients say to me, my goodness, Tracey, I don't have any mechanism in my existing agreements to deal with scope creep. I do all the extra. I want to go above and beyond but I don't charge for it because it wasn't outlined in the proposal or it wasn't in the quote or I feel awkward or bad. We can remove all that right now by saying to you, have a really clear framework in your legals so your client service agreement or your terms of service, whatever you call it, have a really clear framework for setting out the services, what your services include, what's excluded, what constitutes a variation and how a variation will work.

[00:11:19] Making it very clear that if there is a variation, there will be additional fees to pay. So when your client reaches out to you and says, Hey, that was great this morning, can you also please do X, Y, and Z? You can respond and say, sure, I'd love to. This will be the cost. The client then says either, fantastic, go ahead, or, oh, I didn't realize that it was gonna cost more.

[00:11:38] Don't worry about it. Either way, you are not working for free. There's been no scope creep. There's been no deterioration on your profit. So if they say yes, that's great. Go ahead. Guess what? Crystal clear expectations here that you know what you have to do now, the client knows what you're going to do and the client's expecting your invoice.

[00:11:58] So you then invoice for that work [00:12:00] as in when you say you will and you get a swift payment. Versus a client who doesn't know the invoice is coming, you haven't got a clear mechanism for dealing with variations, so you haven't used any process to solidify those variations and the costs and then later, after you've done all the work, you send an invoice and the client says, gosh, I wasn't expecting that.

[00:12:20] I didn't realize you were gonna charge me. If I thought you were gonna charge me, I wouldn't have gone ahead with it. And you are in an awkward situation where you're potentially jeopardizing the relationship and you're unlikely to get smooth payment if payment at all. That is one of the biggest and quickest killers of the profit margin right there, working for free out of scope without the prospect of getting paid.

[00:12:42] So if you take this on board right now at this time of year and have a look at your legal agreements and say to yourself, right, I'm really happy with my legal agreements. They've got all the things and we absolutely have solid legals that are on brand, and I know they help convert prospects to paying clients, fantastic. If you can then say, my payment terms are so clear, they set me up for success. I honour them all the time and I don't have any issues with payment, go you. And if you can then say, scope creeps not a risk for me because we have clear boundaries and I have a variations process, which we always adopt.

[00:13:17] Excellent. Our work here is done. However, if you are listening to this and you're thinking, gosh, I'm not quite sure that my payment terms are tight and I really do have a bit of discomfort or feel a bit awkward dealing with that variation process Tracey and scope creep really is real. It does happen and it's awkward and not quite sure if my legals are on brand and I don't know if they're converting prospects to paying clients.

[00:13:42] If you are saying any of those things. Now is a good a time as any to reach out and let's have a conversation because we can have a look at what you have in place. We can identify gaps and we can uplevel and we can have that conversation and we can take care of that Or if you don't have any documents in place, [00:14:00] let this be your motivation and energy boost.

[00:14:02] Say, right now's the time, this is something I'm gonna invest in. I am gonna invest in contracts that support the business. I am going to invest in legals that are one of the most powerful tools my business has. Let's have that conversation too. Please, if any of this is resonating, reach out. Let's have a conversation.

[00:14:20] You can reach out and book in a time to have a free chat via my website and the link is in the show notes. And if you're listening along to this and you think my business friend, or I have a colleague who would benefit from this greatly, please forward it on in any way that aligns because I would be so happy if we could do all that we can to get the podcast into the ears of even more business owners this year and help enrich their lives too.

[00:14:48] As always, thank you so much for joining me. It's a pleasure recording this podcast for you. I love hearing from you when you share your feedback, so please keep that coming this year and I'll be back with you next time.