How to Write a Statement of Work That Sets the Right Client Expectations

How to Write a Statement of Work

As a freelancer, you have greater flexibility in your schedule and the projects that you take, but you still must set expectations of a timely and efficient delivery for your clients. Thus, once you’ve successfully pitched to a client, the next step is to put together a statement of work outlining the tasks, deliverables and timeline for the engagement. Statements of work are legally binding contracts that lay the groundwork for an entire project.  They hold you accountable for the project’s completion and keep both parties aligned throughout the project’s delivery.

Knowing how to write a statement of work that clearly defines your role and accounts for potential changes to the scope of the project can help avoid misunderstandings between you and your client moving forward.

What your client needs to know before you begin

Your statement of work will serve as a reference point throughout the project and minimize confusion on the project’s scope. Before any billable work can begin, you must provide the following information so that your clients know what will be completed, when it will be completed and if you are delivering as promised.

    • Purpose: Write a brief statement on why this project is happening and what it hopes to achieve.
    • Scope of work: This is a clear outline of the tasks and milestones necessary to meet the project’s objective. The scope of work will also list any hardware and software involved in the project.
    • Location: Identify the location where the work will be completed, including the location of any necessary hardware or software. This is especially important given the increasing shift to remote work.
    • Deliverables: Include a list of what is due to the client and when.
    • Timeline: Define the start and finish times for each stage of the project, the number of hours that can be billed per week or month, as well as any other scheduling details.
    • Payment: Determine your rate (e.g., hourly vs. fixed), and create a list of how and when you will be paid for the project.
    • Additional notes: Include any important clauses or information that clarifies your role, including any industry-specific standards or government regulations to be adhered to for the duration of the project.

While the statement of work should be detailed, it doesn’t have to be very lengthy or overly complicated. Paro fractional bookkeeper and controller Jay R. explains, “The three things that every statement of work needs to be is simple, precise and consistent. Simple enough that you know what’s in there, and your client knows what’s in there. Precise enough that you can go back and point at it and say, ‘This is the thing I promised to do, and here’s all the times I did that thing.’ Consistent, so that as the freelancer, if all of your clients have very similar statements of work, you know what you’re doing, and you shouldn’t have to reinvent [it] completely from the ground up.”

How the statement of work can benefit you as a freelancer

In addition to setting expectations, statements of work provide key benefits and protections to freelancers as well. As a freelancer, these statement of work allows you to:

    • Plan more efficiently: Statements of work require you to think through how you will execute the project, including the necessary resources, the time it will take, etc. In this sense, you’re given an excuse to plan and get organized before having to execute.
    • Refine your cost estimate: When pitching to a client, you may provide a quote or cost estimate for the project. While writing the statement, you have the opportunity to revise and refine this quote based on the actual time and resources needed.
    • Avoid scope creep: Clients have a tendency to try to add additional tasks that weren’t in the original scope and attempt to maintain the original price for the work. If you have a statement of work, it is easy to go back to the client and reject unreasonable or additional tasks that are beyond the outlined scope.
    • Set clear expectations: Statements of work eliminate much of the ambiguity that could arise between you and a company. Deadlines, workable hours, fees, deliverables and more will all be clearly outlined, so both you and the client can rest assured that the project will be completed.

Expert advice for improving your statement of work

Writing a statement of work requires in-depth planning. Though you may use an online template to create your statement, it should always be bespoke to your client and their specific needs. Paro’s fractional experts have provided additional tips for preparing to write your statement of work and setting clear expectations.

Get all the information you need from the client

If you find yourself with questions as you’re drafting a statement of work, you may not have collected all the details from the client that you need. The more questions you ask, and the more information you receive upfront, the easier it will be to draft an effective statement of work. For financial consultants, this could be information from financial statements. For other freelancers, this can mean an extra discovery call with the client to go over their objectives.

Paro fractional CFO Jeffrey Fidelman explains his process: “I need to understand what the gaps are. Why are we doing this? What do they need? I always use the first 20-30 minutes, frankly just interviewing the potential client. I want to understand their business within that first 20-minute conversation, so that I can then digest that information and ask them questions like, ‘Well, have you done this? Have you thought about that? What is your approach to X, Y, Z?’” Understanding the client’s goals allows you to ask the right questions before defining the project’s scope.

Clearly outline any access you will need to company resources

Many fractional finance experts need access to internal resources like financial data, the company cloud, ERP systems  or other platforms in order to complete a project. Getting access isn’t always a straightforward process, since companies often have privacy and access rules when it comes to sharing resources with non-employees. To get ahead of such issues, outline what internal data and resources you will need in the statement of work itself. That way, the client can quickly request access and clearly explain to internal stakeholders why that access is necessary.

In addition to data and tech access, Jay also addresses communication styles on a client call to understand their preference. Do they prefer to communicate through email? Phone call? The company’s messaging platform?

Define the task cadence

How often will you perform recurring tasks or check in with the client? Include this information in your statement. “What I like to [include] is the cadence of the things, like a task, and how often it will be performed,” Jay states, and provides an example, “Bank transactions will be downloaded daily on weekdays, and profit loss reports and balance sheets will be generated monthly by ‘X’ business day of the month.”

Be clear on pricing

Pricing is one of the most important pieces of the puzzle, and it will often be the main area of negotiation. It’s important to outline the following:

    • When you expect to be paid
    • How you’re determining your rate
    • How you expect to receive payment
    • Who will receive the invoice

If there’s an opportunity to increase your rate as extra work comes through, add that to the statement of work as well. Jay, for example, prefers to charge a fixed rate in order to avoid having to estimate an exact number of hours that the project will take to complete. If the project’s scope increases substantially, however, then he will bill additionally by the hour. Fidelman, however, prefers an hourly rate, so that if the time needed for the project increases, the fixed rate will not equate to less than his typical hourly rate.

Be clear on what you will and won’t do

When drafting a statement of work, it’s common to outline the steps you are going to take. However, few freelancers think to outline things that they won’t do, such as techniques they won’t use or items they don’t have the authority to do. While you can imply the things you won’t do simply by leaving them out of the statement, it is still important to make these items clear when speaking to the client during your initial conversations.

Fidelman states, “I’m not trying to dig and figure out, ‘Oh, I have this one skill. How can I make it applicable to this company?’ But, rather, let me unearth all the company’s problems. I will tell the company where I can be helpful, but I will also tell the company where I cannot be helpful.”

Prepare for changes to the project’s scope

As internal business needs change, so may the scope of your project. When changes do happen, make sure to promptly revise the statement of work to reflect the updated criteria. Or, include clauses in your statement of work that state how you will move forward if the project changes or expands.

Jay likes to set guardrails and include a clause in which he and the client will have a discussion if a certain event takes place. He also includes a task that allows him to monitor changes throughout the project. “Specifically, the task is to monitor the hours and review and discuss the workload at 30, 60 and 90 days,” he states.

The statement of work is your source of truth for expectations throughout the project, so keeping it up to date is paramount to avoid miscommunication and confusion with the client.

Whether you are new to the process or you’ve written many statements of work before, there is always more potential to grow your business. One way is to join Paro’s network of fractional finance experts. Paro matches professionals with vetted clients looking for solutions to their financial and strategic business goals. Meanwhile, you will have the tools and support to build your own business and find meaningful projects on your own terms.

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