Why you should have Agreements & Paperwork

Have an agreement for everything ready. Vendors, Consultants, Employees, Non Disclosure Agreements (NDAs), Rate Charts etc.

Each time money flows into your system, ensure there is proper paperwork for that. Invoices, Share Purchase Agreements, Convertible Debenture Agreements, Loan Acceptance Documents, etc...

Each time moeny flows out of the system, ensure there is proper paperwork - Employee Contracts, Rental Agreements, Vendor Agreements, Petty Cash Books, everything.

The reason for this is simple. When there is a dispute, everyone runs to signed paperwork.

Signed paperwork should clearly spell out: What is expected from the party receiving the money, what is the schedule of deliverables, what is the penalty for late payment, fines, interest if any, everything.

More paperwork you do, better your chances for dispute resolution. Also when someone comes and does due diligence on your Startup for funding, it is good to have your papers in order. Ideally, you are meant to keep all your papers, bills, receipts etc for many years after the expense or revenue incident actually happens.

Here is a handy tip - make everything (expenses and deliverables) measurable. Do yourself a favor - Put the responsibility of alarms and whistles every time a billing crosses a budgetary limit - on whoever you are paying (eg: vendors etc) - so you don't get surprise BIG invoices. Make a habit of putting this in your agreements. You will thank yourself for this later.