When you are a small- or mid-sized business, you might be forced to use your customer’s preferred vendor contracts. This is especially common when dealing with large companies and local, state, or federal government entities. You can make these transactions go more smoothly when you provide the necessary training to your team. Below, we provide some guidelines to help you organize a document review process. This process will help your team train themselves on how to handle other company’s contracts. Not only does this make your company flexible without taking unnecessary risks, but good training also makes your team work faster. This is one critical step in reducing contract processing time from sale to signature.
As you create this manual or guide for your team, include the following elements:
How to Scan for Negotiation Points
When companies are put in a situation to use other company’s contracts, they will likely find at least a few things they want to change during contract negotiations. Parties who enter contract negotiations without doing their homework don’t fare as well as those who have spent the time doing research. Your team needs to be able to easily scan another company’s contract to look for terms that are not agreeable. You can facilitate this in a couple of different ways.
First, create a standard process document that covers typical negotiation points that you can distribute to your team and include in their initial training. This list should cover all of the necessary and preferred provisions, as well as red flags to look out for.
Second, utilize the power of the contract repository in your contract management software programs. Your team doesn’t have to reinvent the wheel for each negotiation. Instead, they can search for previous contracts with the same vendor or client to find out what areas might have been negotiated in the past. Having access to stored contracts allows users to easily search for specific clauses. They can also find resources from previous years that can help them research negotiation points with a new company.
Reasonably Pushing Back During Negotiations
When you present a company with your contract, you likely receive some pushback. The reverse is also true. Contract negotiations often include pushing and pulling until both sides are satisfied. But when your team is handling contracts from other companies, they will be the first side to push back. Successful negotiations are a balancing act in which one side can walk away if the other pushes too hard. So it’s important your team knows how to initiate the process without coming on too strong. Pushing back can be done in a delicate manner. In some cases, it’s as simple as your negotiators revealing your company’s wants and needs. Then the other company may offer simple concessions. Yet, in other cases, the outcome might not be favorable.
Some are natural negotiators and really know how to “read a room. “ Other salespeople or negotiators need some coaching to learn how to not leave money lying on the table and ask for the best deal possible. You can train your team to reasonably push back by providing them with a standard process document they can access in your contract management software program. The document can offer limits and ranges for discounts, costs, fees, and any other terms which might be points of negotiation. It can even include scripts for negotiations over the phone. Additionally, you can offer your team tips on how to be assertive, a clear definition of what constitutes reasonable, and ways to ask for concessions without being offensive.
Profiting with Customer Contract Templates
Using another company’s contract adds extra layers of work for those involved in the contract lifecycle, especially with new customers. Your team must research their company and spend extra time analyzing a contract to ensure the terms are acceptable. If you have am external legal service, they might need to scour the contract for unfavorable language and any possible loopholes. This extra work and time should come at a cost when customers want you to work with their contract templates.
Communicate to the customer that using their contracts will come at an extra cost. Companies who prefer to use their own contracts but want to save money might consider using your company’s standard documents. Train your team to deal with these situations and stay profitable while using customer contract templates. Depending on your business, you may be able to create progressive price thresholds for fees. For example, if vendor XYZ does so much business, your company won’t charge for using their contract templates. At the smallest amount of business, vendors would pay the highest price for the use of their templates. The price would decrease as the amount of the deal increased. Even if companies can’t pay directly, the request should come at the cost of a lower discount threshold
Contract management software has powerful tools to help you create the training materials you need. You create the standard process documents you need for your team to handle other company’s contracts successfully. Even better, you can easily share them with team members. Contact us to learn more about our software solutions for your business and sign up for a helpful demo.