Advice to sewing contractors pt.2

This being a continuation from part one, I’ll address other common questions I’ve heard from start up sewing contractors. Specifically industry norms and standard practices among colleagues with respect to NDAs, contracts, payment, what you charge for versus what is thrown in with the deal. Again, designers are welcome to disagree but to keep in mind that this advice covers common policies.

NDAs -Non-disclosure agreements
As I have said many times, it is generally recommended that you don’t sign an NDA because they do nothing to protect anyone’s ideas and signing one imparts false confidence. Whether your customers can bring pressure to bear for you to sign an NDA depends on your operation, customer profile and scope of services.

There are two basic kinds of contractors. The first are full package soup to nuts (part one, part two) and the second parcel out services specifically like cutting and sewing etc. The cut to the chase summary is that signing an NDA is more common in soup to nuts (full package) contractors that target DE clients. Signing an NDA is relatively risk free because their average customer is very short term, only producing for one season or maybe two.

It is far less common for established sewing contractors (not full package) to sign an NDA because most are interested in developing a long term relationship. These contractors don’t sign because NDAs are pretty useless (see links above) and also, they aren’t interested in working with people who are paranoid and have misplaced priorities.

Summary: Even though your customers may request it, credibility in the trade is higher for companies that don’t sign them versus those that do -and since a contractor is more likely to get work from colleagues, it matters what they think. I wouldn’t say this is true in all cases but being willing to sign an NDA creates the impression that a contractor is inclined to take advantage of customers with respect to pricing and what not, making other providers reluctant to refer customers to them.

Policies and contracts:
First policies. Don’t take a customer who can’t answer these five questions by phone or email. It will save you a lot of wasted time and grief. To determine whether someone is serious or has put the cart before the horse is a bit more difficult (but following the links and reading the entries is helpful!). Be aware that new designers tend to do a lot of talking, far in advance of need so explaining why they may be getting the run around could reduce some of it. Or just send them the link.

Customers love contracts and they’ll want one from you because they think contracts are an insurance policy. Nobody I know of has an official sewing contract, they are quite rare. The only contract is the purchase order the customer gives you which should be based on the description of services you gave them with the estimate. Understandably, the customer wants to avoid problems and miscommunication but they often don’t have the means to develop a Statement of Work even though it is their responsibility so it falls to you to do what you can of that (part one, part two). Most of the details can be pulled from the tech pack if there is one. Be aware that developing a tech pack is also not your responsibility unless you agree to provide that service (for a fee). The objective here is not to limit your exposure to risk but to stress that you cannot agree to terms of the job unless your customer can define their expectations.

Services and charges:
The latest rumor going around is that pattern work performed by the contractor should be free. This is false. Some customers will say “if you want the work” to which you should probably tell them to find someone else because nobody (domestically) is doing that. There are legal considerations too. For example, the pattern is only legally theirs if they pay for it. If you pay for the cost of the pattern, it is your property to do with as you see fit. You could use that pattern to make stuff for a competitor, sell it on eBay or whatever. In short, a customer is only entitled to goods and services they pay for. If you decide to throw in whatever, that is between you and your customer but free patterns and free samples (below) are not standard practice.

The costs of samples -no, these aren’t free either- can be done one of two ways depending on the customer and anticipated size of their order. Some contractors charge an hourly shop rate for cutting and sewing of samples -including the sample you must sew to get a price quote. Just as many companies will charge three times the cost of production. Some customers bellow about the latter so if you’re just starting out or after the process of sampling have decided you don’t want the job, then track the hourly and charge that since your costs in the project will be higher than the 3X rate. Make these options clear to your customer up front. Their choice is to pay the full cost of your services or 3X the production rate. Tell them I said they should probably go with the latter.

Payment policies:
Payment policies vary, each business develops their own depending on the services provided to the customer. Some common practices:

  • If you are doing fabric or trim sourcing for the customer, get the money before you place the order.
  • If you are providing thread, guts or goods as part and parcel of the job, this cost is rolled into the price of the contract and subject to your contract job payment policies.
  • If you have to outsource any of the work (patterns etc) the customer can make their own arrangements with the provider or you can can charge a deposit.

Speaking of deposits, these are not uncommon. Typical arrangements are to get 50% of the anticipated (purchase order) invoice just before you start the job -meaning, you can only cash the customer’s check with a firm start date.

As far as final payment, it is most common to be paid when the customer’s job is shipped or picked up. Of course you can do otherwise as circumstances dictate but these are most common.

It is not unreasonable for a customer to expect you to accept debit or credit cards so if you’re not, it’s time to get with the program. Another payment option many customers appreciate is PayPal. I probably get 50% of my invoicing paid via PayPal. Paypal is also ideal because they have a new program that finances the customer’s purchase for six months at no cost or risk to the vendor.

If this entry gains any traction, my next post will be about how to manage customer expectations and how to network effectively with other service providers to find good customers.

Related:
Advice to sewing contractors pt.1,

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8 comments

  1. Jessica says:

    Wow, thanks again for providing such a thorough outline of important things to consider. I’ll be busy for a couple of days just following all the related links!

  2. Rocio says:

    Comprehensive service contracts are not the norm in our industry, but investing in one has allowed us to quickly identify (and shield from) prospects who would most certainly become EXPENSIVE nightmare clients later:

    1) The chronic complainer
    2) The picky diva
    3) Design/scope creep king
    4) The “Energizer” who expects access to you 24/7
    5) The “Charity” who makes a case for services to be provided as donations
    6) The “Dazed and Confused” who can never remember to pay invoices on time
    7) The “Houdini” who disappears when they have an appointment but show up when least expected
    8) The “Sybil” whose other personality must have ordered those services when payment is due
    9) The “Moguls” who’ll have their “legal team” oversee every communication exchange
    10) The “Big Brother” who wants to micro-manage and have a minute count of every project

    Sewing contracts for every specific order may not be practical, but I think it’s good practice for ANY business to have policies in place which clearly deal with the following areas:

    – What (General scope of services offered by the company)
    – Where (Where these services will be performed)
    – When (Standard turn around)
    – How (who is responsible for what)
    – How much (provided that each party takes responsibility for their areas)
    – Why (cost structure should be clear)
    – Contingencies (what if things don’t go as planned)

  3. Mia says:

    Kathleen, thank you so much for all your valuable information.

    Rocio, I have worked with 7 of the 10 client types on your list!

  4. Sabine says:

    i would love to learn more about how to manage customer expectations and how to network effectively with other service providers to find good customers.

  5. Xochil says:

    Rocio, I agree with your Who/What/Where/Why/How clause. I think that’s necessary to discuss between parties and have in writing. It doesn’t need to be a full drawn out contract, but something that both parties agree to and perhaps is listed directly on the purchase order to serve as a reminder for both parties. Payment terms and expectations should not be assumed, and one should not assume that a contract for one contractor will be agreed upon by another contractor (for example you may establish net15 for one contractor, but starting a new relationship with another they will not extend those same terms right away). Both parties should be on the same page.

    Kathleen – I understand that the NDAs do not hold much bearing, and are pretty useless in the realm of this type of work. However I don’t see a problem with quelching their fears as long as they know they’re not the only person designing a particular type of garment (contemporary/fitness/denim/accessory/whatever). FWIW it is always a brand-new designer (working on their first garment or first season) who asks for NDAs to be signed. I bet they quickly figure out that it’s not necessary (or I hope so).

  6. Rocio, your list is hilarious. My favorite (not) is Charity and The Mogul :::sheesh:::.

    Xochil: That it is always a brand new designer requesting an NDA is one of the pivotal reasons (see those links I left) I discourage them. There’s no better way to announce to everyone that you’re new. Well, that and that they often are copying someone else…

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