Your contract negotiation process can be one of the most challenging stages of your total contract management process, but it doesn’t have to be. The more you can automate it, the more smoothly the entire process will run. Automation through your smart contract management software can make a big difference in the entire process. Setting up strong protocols can:
- Decrease the hours spent on negotiation.
- Streamline the process for reviewing contracts.
- Increase the safety rating of your contracts.
- Make it easier to create a standard contract.
Make sure you’re using these strategies as part of your contract management process.
1. Create Standard Contracts
When your negotiators go to create a contract, they shouldn’t have to start from scratch. Even when they’re working with a new client who has brand new demands, the contract should start from a standard document. Statements of Work should have language, terms, and sections determined by each product or service added to the order.
In short, you should only rarely have to create a completely new contract.
If your negotiation team has access to a standard contract template, they can easily add the details to meet a new client’s needs and demands. By simply filling in the blanks on amounts, timelines, and other details of a specific client, your negotiators can easily put together the initial draft of the contract. Even better, it will meet your company’s KPIs from the start. If you have standard contracts but it’s been a while since their last review, look for these common areas for improvement.
2. Establish Your Standard Change Thresholds
Within any contract creation process, there is some room for negotiation.
As easy as it would be if your clients automatically signed the standard contract for every agreement, there will be times when you need to negotiate. Sometimes, clients will push for lower prices. Well-paying clients may want some alterations to the services you offer to fully meet their needs.
Within those negotiations, however, you should establish a standard range that you’re willing to operate within. While you might be willing to offer a discount for a high-volume customer or one that has given your company a great deal of repeat business, you’re only willing to discount your services or products so much. After all, you have to generate income from the contract!
Your company likely has standard deviations for other areas of the contract, too. For example, you have a timeline on which you’re usually able to deliver your goods or services. While you might deviate from that timeline for a rush order, you can only put things together so quickly on a regular basis.
Set your contract management software to automatically display those deviations for your negotiators. Provide them with easy access to how far you’re willing to negotiate and where the hard-line is drawn. As a result, you’ll find that you have to spend less time dealing with the approval process since your contracts will already be acceptable. You can also grow your team faster as you empower every person with the tools they need to finalize deals and free up your own time.
3. Program in Your Hard Terms
There are some terms that you simply aren’t willing to negotiate on — for any client. These might include compliance standards, legal requirements, or even what type of services you’re able to deliver. Whatever those hard lines are, program them to auto-fill in your contract management software.
Highlight them so that negotiators can easily see them, and make the text uneditable. If you have a clause that is always included in your contracts, ensure that the program puts it there, in the appropriate place, automatically.
This simple step can save a great deal of time both on contract creation and on the approval process. Not only does it reduce manual work for your contract team, but you’ll also know that the right clauses and terms are already in place.
4. Automatically Score Contracts
Your contract management software should, ideally, include a scoring system. Learn more about how to build a scoring system around key performance indicators (KPIs). This will make it easier to keep up with any potential risks in your contract. You don’t just have to score contracts when you file the final forms, either. Since your contract management software can put together those scores automatically, set it to score contracts at several different points in the process. This can offer a guideline that makes it easier for your negotiators to see how different changes impact hypothetical contracts. They can also determine if they need to make changes before moving on.
Even with a standard contract template, you might end up with a contract that poses far too much risk for your business. By automatically scoring contracts at several points in the process, however, you can catch problems quickly. Negotiators can then clear up any misconceptions or fix any problems before the contract moves down the line during the approval process. This can reduce revisions, approval declines, and roadblocks that make everyone frustrated.
Automating your standards can significantly streamline the contract negotiation and approval process. It can also make life easier for your negotiators and your customers. With these strategies, you can let your team spend more time focusing directly on what clients need and free up your approval chain to take on the other responsibilities they face on a daily basis.