We can probably agree that getting a contract written up and signed should be the easy part of a sale. A formality before the final handshake.
But is it? How familiar are you with a streamlined contract management?
The World Commerce & Contracting estimates that poor contract management costs companies an average of 40.5 hours and 9% of their annual revenue. I bet you can come up with a better use for that time and money!
Mismanaged contract workflows result in administrative bottlenecks in your sales pipeline. The extra time spent by sales, legal and operation teams writing and approving contracts adds up to your client acquisition costs. Even worse, it can kill the momentum of a sale.
Moreover, errors increase risks on liability or compliance. Missed savings opportunities and unwanted contract renewals also impact your bottom line.
Service companies offering mid- and high-complexity services incur the highest contract management costs (Click to Tweet). These are only rising due to increased compliance requirements and the need to involve multiple individuals.
The good news?
The solution is not rocket science! Best practices for contract management can be implemented in the short or middle term, and your company will start reaping the results right away.
Digitization, smart contracts and artificial intelligence offer tools to cut costs and manage your contracts’ lifecycle end-to-end. No excuse to be a contract “laggard”!
Here are 5 best practices that your company can easily implement to streamline its contract management.
1. Engage stakeholders early
Any contract requires the input or approval of various stakeholders. To make sure that everything runs smoothly, engage them early on the negotiation process. Don’t find yourself at square one because someone requires changes at the end of the process.
To ensure collaboration from an early stage, you need visibility of the contract and good communication. Using a contract negotiation and management platform, you can share the contract with the right stakeholders. Forget about having 5 versions of the same contract: you need a shared location where everyone can access the updated version and provide their input.
2. Use clear language
Stay away from legalese and jargon! It’s better to show your expertise by delivering excellent value, rather than using puffy expressions that your client cannot understand (Click to Tweet). If necessary, clarify any words that you think might be confusing. Clear language will build trust and transparency.
Moreover, ensuring that your prospect understands contractual responsibilities reduces negotiation cycles and prevents misunderstandings. Keeping contracts short and sweet makes them easier to review and approve, both internally and on the client’s side, ultimately shortening your sales cycle.
3. Use templates
One of the easiest ways to cut time in contract management is using templates. Providing contracts speedily after a demo or sales call can keep the momentum of a sale and speaks for your company’s service level.
Your company can have pre-approved templates that simply need to be filled with the right information. With a contract management software that is integrated with your CRM, these fields can even be automatically populated.
Remember to save the updated version of the templates on a shared contract library. This way, you make sure that employees are using the right version.
What about adapting the templates in negotiations? Check out the next tip.
4. Have a playbook for negotiations
Salespeople often negotiate contract terms on a case-by-case basis. However, every company will have certain guidelines and negotiation limits. After some time, you can probably identify a limited range of negotiating positions, discounts and benefits you can offer. Consolidating this “tribal knowledge” into a negotiations playbook can help sales teams save time drafting contracts, improve consistency of your offerings and ease the approval by managers/finance. Moreover, it can also help with the on-boarding of salespeople and lawyers.
A negotiations playbook typically includes the company’s standard contract terms, acceptable price discounts, explanations of clauses and possible variations of standard clauses, standard agreement language, signature and approval processes.
Having a negotiations playbook can also make your contract automation easier, as most smart contract software require you to divide a contract in multiple clauses and set up acceptable alternatives for them. Users can then pick the adequate clause option according to their negotiations, cutting time on contract drafting.
5. Automate contract management
Too often, contracts are stored in the dungeon and forgotten as soon as they are signed. But contracts are not static entities; they should be actively managed. (Click to Tweet)
To streamline your contract management end-to-end, it’s a good idea to look for a contract management solution that includes smart contracts.
Smart legal contract solutions like Trakti can help you stay on top of your contracts. These contracts live on the blockchain and pull information from different sources to automatically trigger the execution of clauses.
Details like deliverable, quantity, frequency of shipment or payment terms are linked to the contract’s clauses. Using conditional logic, smart contracts perform tasks like automating payments when a job is delivered or manage contract expiration and renewals. This way, you can accelerate payment and reduce friction.
Are you ready to streamline your contract management? Check out Trakti to discover what it can do for your company.