People also sign contracts with suppliers as well. Once this agreement term comes to an end, they need to be renewed. A business venture needs to ensure that they renew their contract so as to ensure all their obligations with their customers, suppliers, service provider and other entities are legally protected. The contract renewals process can be perfected by use of contract management software.
Contracts can either be verbal or written and sometimes it can be a combination of both. Finance agreements and contracts to do with real estate selling or buying should always be in writing. For a contract to be legal, it should entail four essential elements among them an offer and acceptance. It should also entail an intention for creation a legal relationship and consideration which is usually in the form of money.
There is no specific structure for a contract. They, can, however, generally follow a structure that entails details concerning the parties to the contract as well as any arrangements they have for sub-contracting. Some of the other items include the duration of the contract, definitions of, description of the goods or services, payment details and this includes the interest to be paid in case of late payments. There should also be key milestones and dates, required indemnity and insurance provisions, guarantee provisions including the guarantees of the director. Contracts also include penalty or damage provisions, renewal or renegotiation options, disputes and complaints resolution process, termination conditions and special conditions.
Managing Contract Renewals Efficiently
Just as with any other aspect of business, it is important to have good practices for ensuring that you manage contract renewals in your company. The first step in the management process is having ideal software that will ensure that will keep the terms as well as track the approval process of the transaction. It will also let you know whenever the term of the contracts is over. In most cases, an approval process is needed before the execution of the contract. Additionally, there could be more people who are part of the workflow for the contract renewals.
When renewing contracts, it is important to include everyone so as to prevent any contradictions or problems when it comes to legal obligations and billing. You should also check to find out if there are any standard clauses or terms to be added to the contract renewal. In case there are any, you should ensure that you have added them to your contract. To avoid complications with the other party, you should tag all the terms in the contract, and they should have the necessary approvals as well.
The Goal in Contract Renewals
Companies will need to renew their contracts from time to time, and a reason for this is to ensure that the contract entails any changes in the businesses for the client. Renewals also remove all services that the parties do not need. It is also important because it helps to verify that the volume of what is being used matches that which people are buying. You may need to do some adjustments upwards or downwards. You may also need to add more updates or services in case they have any businesses value. The new contract should also address all issues that were in the previous contract. In some cases, the sales level agreement may not be specific enough. It may also need updating and in both cases, you need to make sure that these changes are in the new contract. It is a new opportunity to revisit prices as well, and this presents a good opportunity to let your clients know. For instance, you should check into whether the original contracts include all costs into the amortized costs. You should also check and see if it is time to reduce the rate and include competitive pricing for the new contract period as well. The main goal is to ensure that there are value and this case, value means high-performance levels. It also includes easier administration, reliable and consistent delivery at an affordable cost.
Before you Sign a Contract
Before signing a contract, it is important that you read everything carefully, and this includes the fine print. You should ensure that it reflects all the negotiated terms and seek advice in case you fail to understand any of the terms. You should never allow yourself to be pressure into signing anything in case you are not sure of it. A signed contract should never have any black spaces; you should cross them out if you do not have anything to add to them so that no one is bale to change anything on the contract. There should be initials from both parties in case there are any changes to the contract. You should also get a copy of the signed documents once it is done.
After contracts have been through their full life cycle, they come to an end phase. The entities that have signed the contract can decide to end their contracts by agreement where both parties can terminate their contract, and this can be before the completion of the work. Sometimes a contract can be terminated because of frustration resulting from unavoidable circumstances that neither party can control. Sometime people can terminate contracts as long as they have provided notice to the other party. There are instances where a party will fail to comply with a particular condition in the contract meaning that the other party will have no choice but to terminate the contract.
The process of Contract Renewal
In most contracts, there is often a provision for contract renewal. Although most renewals take place without a hitch, sometimes there can be thorny issues that the two parties may need to iron out. One way of ensuring that there are no issues before the contract renewal is by ensuring that you use a good contract management software of which manages contracts from the initial stage to the renewal stage.
Contract Renewal Software
Contract management software works by automating all the tasks of renewing contracts as well as those of backing off all the orders to third-party suppliers at the required time. This ensures that your revenue is secured and that your company does not experience any interruption to its services. The software also simplifies the tiresome task of processing and renewing several support contracts as well as service level agreements (SLAs).
Contract management software can manage thousands of contracts associated with the business in one repository, and you can access them through any app. Some companies also integrate various processes on their platforms. This makes life easier for most companies. Since companies have different needs, there are some vendors who configure solutions to match those of their clients. This means that you will get adequate help whether your company is in need of low volume renewals or enterprise renewals.
CLM Software features that help in Contract Renewal
Contract management software has features that automatically alert contract managers to notify them if a contract is up for renewal. The manager will then have time to check and approve the contracts before the renewal date to ensure that the pro0fit margins are maintained and that there is no risk of late or incorrect billing. Customers, on the other hand, are also automatically notified before the renewal and will have the ability to approve and review their contracts as well as associated documents. This includes all the terms and conditions. This is normally done online by use of a secure portal with the ability for electronic signature. It also allows self-service features which mean that you will not have to bring in a person from the software company to help you work on the renewal of your contract.
Contract management software also has tracking features that track the current open support issues, and that can help customers raise new online requests. The software also ensures that the accounting system is automatically updated, and this means that the invoices are automatically updated and that the invoices are issued on time. You can use credit control as well to have visibility of the entire process. This helps to improve the process of collection as well as decreasing debtor days. The software can also help purchasers to see the cost pricing as well as determine when orders should be placed. This helps to reduce the risk of late payment for renewal fees and helps to know when to look at the contracts for re-negotiation. With the software, management will also have a visibility of the contracts and their current status to determine easily new dates for renewal trends and rates.
Benefits of using CLM Software in Contract Renewal processes
All companies are in business to make a profit. When the contract renewal process is made easier, the rates of contracts will increase and so will the profitability of the company. Since vital processes such as invoicing will be accurate, the company will not lose money, and this means that you get to seal all the loopholes for losing money. Reduced debtor days are important to any business and it means you get your money after a short time. With improved control and visibility, the executive will be in charge of the operations in their company. Contract management software will also increase productivity and efficiency which means smoother operations in the company and faster renewal processes. The company will also get to enjoy reduced costs because there will be reduced liabilities and risks. With contract management software there is also enhanced supplier and contract performance in the company. With the software, you will also evaluate your performance during the contract, the parts that need to be improved, open issues, cost considerations, service needs as well as the effective strategy for contract renewal.
Why Contract Management Software is Important for Contract Renewal
Quite a number of companies have missed opportunities for generating revenue after missing dates for contract renewals. This is because it is often quite risky, costly and time-consuming and this often causes people to forget dates for contract renewal. Such a thing can never happen with contract management software because everything is done automatically and you will be alerted when there is the need to renew a contract. Failing to cancel contracts with suppliers within the set period can expose your company to increased costs and loss of services. The same will apply when you fail to renew the contract on time.
You may also lose a good chance to renegotiate your contract if you do not fully understand the date of the contracts. You should, therefore, get software that will remind you and keep you on your toes. Supply and support contracts play a vital role in ensuring that your company is profitable and affects different areas of the business as well. You should, therefore, ensure that these aspects of your contract are handled accurately and timely. Sometimes a business may find itself uninsured because they forgot to renew their contract which can be very dangerous and in some places illegal. Protect yourself from all these by getting the best software in the market for contract renewal.
Risks of poor Renewal processes in the Company
If the renewal processes in the company are not handled as required, there is always the potential for loss of profit and revenue for customers. Poor processes will also give your competitor an edge over your company which means that you will lose customers and consequently lose money. As far as supplier contracts are concerned, there is always the risk of losing support or service. There are also increased costs of renewal, profits erosions. You will also use more effort and time in your contract renewal transactions as opposed to if you had used contract management software. When contracts are not managed properly, they will need re-negotiations which can take much time hence slow down of the business cycle.
Prepare the company for Contract Management Software
Early preparation is critical for people who want to implement contract management system in their negotiations. You should prepare your company for the contract management software. One way of doing this is by training personnel in your company how to use the software. It is advisable to have someone in charge of the software implementation and administration as well.
Basic and Core Function of CLM Software for Contract Renewal
Contract management comes in various forms, and this means that you can find a sole proprietor keeping track of a few contracts. In some instances, you may encounter a company with thousands of contacts that are being handled by various teams. The basic functions of contract management are storing, tracking key provisions, a system for finding contracts. The information in the contracts or implicated by the contracts should be reportable or understandable. In short the contract management software is for storing, tracking, searching and reporting.
How to get the best Contract Management Software
When looking for contract management software, you should ensure that it entails a proper system for contract storage. If the system offers storage, you should ask yourself the manner of storage for the contracts. Different companies shave different needs, and the system you are looking for should be able to customize its solutions according to the needs of the company. You should also be able to set the alerts in such a way that they will let the manager know if the contract has expired and needs renewing. It should also let the manager know if the key provision is being used.
All data software has data fields, and you should always check to see if the data fields you are entering are searchable. You should also look at the level at which you can refine and filter the search. It is advisable to check if you can save the search to be used in the future. You should also be able to search the actual contract. Most people do not know this, but it is wise to have software that will enable you to export the results of a search or make it into a report. It should also generate just data/numerical or visual reports.
Some of the contract management systems offer feature-rich systems, and they can be used by small companies but also offer systems and features for large entities as well.
Some of the software available on the market today addresses particular problems. Contract renewal is among such problems, and it is, therefore, important to be very keen when choosing software to solve a particular problem.
Cost of the Contract Management System
There is no uniformity when it comes to the cost of contract management solutions. The difference in costs arises from the fact they have different features and some cater for small organizations while other elaborate systems cater to the large organizations
Authoring Perfect Contracts
You will also need a system that will help in authoring contracts with no mistakes. Such contracts will also not have discrepancies that can cause the company to land into legal problems.
When the security of a contract management system is in doubt or if it is easily compromised it can cause very many problems for the company. This is especially if the information falls into the wrong hands. You should not consider software if it does not offer good security features. This is regardless of the dynamic and streamlined features it will promise the user. Secure system will make the team implementing and in charge of the application breathe easy as they work. Among the security features, you can use for this purpose include bar codes.
When choosing a contract management for your contract renewal, you should be very careful when it comes to the vendor from whom you are buying. This is because you might choose software from a startup only to find that it could not stand the test of time after failing to get good returns. The best vendor is the one that will be around for long where they can upgrade their software. They should always be on hand to lend their support as long as you need them.
Big Names are not necessarily reliable
Sometimes a user will want to buy their software from the big names in the industry because they think they are safe due to the huge numbers of people using their software. It is always advisable to be cautious before using software from such vendors because it may be from a company that has since established its position in the market but does use outdated technology. The technology may be difficult to integrate with other systems as well resulting in issues of incompatibility. Such companies have typical customers they relate to and if your problem does not fit with their solutions they might not be able to help you. Most companies with deep pockets can get a significant market share easily despite them selling inferior products. This is enough reason to approach with caution.
Choose according to Your Needs
As mentioned above, some contract management systems cater for a particular need while others can solve different problems. Since your need is for contract renewal, you should check to see if you can get a solution that will cater for your specific needs. You should also look for effective software that will enhance productivity and efficiency and not just focus on one that will enable contract renewal.
Request for a Demonstration
After meeting the marketing executive of a company for their contract renewal software, most people will just believe their every word and go on to implement their application at work. It is only after issues such as incompatibility arise that they come back to their vendor for another solution. To avoid all these, you should ask for a demonstration. The demonstration should include both the weaknesses and strengths of the software and not dwell on the generic demos that avoid weaknesses and concentrate on the strength of the software.
Contract renewals is significant and should not be taken for granted and it is a far-sighted move for a business management to opt for best and most efficient contract management software to manage the process from the onset to closure. Try our free trial of CMx or Schedule Demo to keep Contract Renewals under control.