I work at a mid-size software consultancy. In our region, the company's reputation is that of a trustworthy and flexible partner, with good engineers.
Our customers are mostly large companies (5k+ employees). It is not uncommon that, for a new project, we already start working for them before anything is on paper (more specifically, before an official purchase order was prepared by the customer). Middle management at the customers love this, because they usually hire consultants for urgent problems, but their internal bureaucracy prevents them from getting a purchase order out fast enough.
So, if your reputation is strong and customers will want to get back to you, I believe that point 2 becomes less important.
I once asked one of our managers why he didn't immediately get a particular verbal agreement on paper. He said "we have to work on trust anyway. We really don't want to get caught in a lawsuit, since it'll cost us a lot of money and energy - if there's a lawsuit, we already lost. So, we simply only work for customers that we trust".
The only case that I know of where we didn't get paid was when a customer went bankrupt. No amount of paper would've saved us there.
>> It is not uncommon that, for a new project, we already start working for them before anything is on paper
This is typically known as starting work "at-risk". You're right that it's a great way to show you're a good supplier. Usually starting work at-risk comes with the caveat that if the customer doesn't sign the contract and/or issue the PO in 2-3 weeks then work will stop.
You are very lucky to be able to pick and choose your customers and work with only those that your company trusts. Not all industries have that option open to them.
That still probably requires some comparable power between companies.
I have a friend, that was hired by a large media company to do some 3D models that the media company was hired to create to Siemens.
He never bothered in making all the proper papers, and just worked away.
Now Siemens got the 3D work, and ran away with the money... And how you can sue Siemens? They are so huge that if you attempt that they will make you go bankrupt in lawyer costs only.
I know, but right now they have more issues (ie: it was found out they were bribing the governor of the state where I live to be allowed to build trains... this probably is one of the factors in their recent leadership change)
I work at a mid-size software consultancy. In our region, the company's reputation is that of a trustworthy and flexible partner, with good engineers.
Our customers are mostly large companies (5k+ employees). It is not uncommon that, for a new project, we already start working for them before anything is on paper (more specifically, before an official purchase order was prepared by the customer). Middle management at the customers love this, because they usually hire consultants for urgent problems, but their internal bureaucracy prevents them from getting a purchase order out fast enough.
So, if your reputation is strong and customers will want to get back to you, I believe that point 2 becomes less important.
I once asked one of our managers why he didn't immediately get a particular verbal agreement on paper. He said "we have to work on trust anyway. We really don't want to get caught in a lawsuit, since it'll cost us a lot of money and energy - if there's a lawsuit, we already lost. So, we simply only work for customers that we trust".
The only case that I know of where we didn't get paid was when a customer went bankrupt. No amount of paper would've saved us there.