Sales contracts should never sit unsigned for too long. But sometimes an approver is too busy, or, even worse, the document sits forgotten or lost in the contract management process. When this happens, salespeople get frustrated, customers might leave for a competitor, and your business suffers. We provide a deeper look into some of the harms unsigned sales contracts might cause and offer some solutions to help you avoid these costly mistakes. In addition to losing business or killing a deal, failure to get in-process signatures can result in these harms:
- Disputes over terms
- Delayed revenue
- Competitive exposure
- Additional costs for both parties
Poor insight into signature requests can cost your business a lot. But it’s just one portion of getting your contracts signed. Streamline your whole process by reading our guide to reducing sales contract processing time from sale to signature so you don’t lose sight of sales.
Disputes Over Contract Terms
If an unsigned contract sits too long, your company might start meeting expected contractual obligations prior to signature. The lack of signature might be due to a bottleneck, a below-standard employee, or because terms still need to be ironed out. But the underlying problem doesn’t matter. When both parties are not in agreement on terms and a signed contract is not in place, the obligations aren’t clear.
Disputes can be troublesome if something doesn’t go as planned. For example, work might be delayed, the product or service may not meet the customer’s standards, or they may want to leave the contract. Without a contract in place because of delayed in-process signatures, neither party can fall back on the terms when a dispute arises. While many sales contracts may still be valid without a signature, it muddies the waters of an already costly issue.
When contracts involve intellectual property, as in the case of a licensing agreement, in-process signature delays can create liability for the company. Usually, a licensing agreement specifies the amount of a time a company can use the other party’s intellectual property. This is especially important for contract renewals. If a contract expires, the company might continue to use the property, which creates risk. Auto-renewals which aren’t approved can also cause issues. They can create situations where an organization is paying for a product or service they no longer use or need. Better signature and contract tracking can reduce these challenges.
Delayed or Lost Revenue
In-process approvals and signatures must occur for a contract to be executed. But signature delays, in turn, can delay the fulfillment of contractual obligations.
That means lost revenue for your company.
It might also mean lost revenue for the other party if you are a wholesaler or distributor to other companies. In the worst-case scenario, delayed signatures might kill a deal and cause a dropped contract, resulting in lost business. A slow signature process can also increase costs and decrease revenue. It might require more negotiations, which are often rushed, to get final signatures. Even worse, this can also include extra concessions.
Loss of Competitive Advantage
Forgotten and delayed in-process signatures damage your company’s reputation. Without strong contract tracking procedures, you can frustrate your customers. This can result in lost revenue. But, even worse, it gives a competitive advantage to other companies who can provide the same product or service.
This can be especially harmful if you do business with government entities. Signature delays on bids and contracts for the government can happen for legitimate reasons. But when it’s simply poor contract management, government entities will look for possible signs of corruption in your company. Whether it’s in the public sector or the private sector, if word gets out that your company has a slow contract cycle, it’s likely potential customers, vendors, or clients will go elsewhere.
Avoiding the Harm of Delayed Signatures
Your company risks delayed revenue and lost business when delayed in-process signatures become the status quo. Fortunately, you can take steps to eliminate or reduce these risks, especially when you use contract management software. Enterprise contract management software gives you the options you need to build a better contract tracking process. The first step is to make signing easier by moving to e-signatures. Some other contract tracking and signature tracking steps you can take include the following:
1. Allow each party (internal or external) to track the contract process.
They can see the progress for themselves, which includes viewing edits, making comments to answer questions, or suggesting new contract language.
2. Allow your team to have visibility into in-progress signatures.
The ability to monitor progress on a specific contract allows all team members to stay on top of them. For example, they can reroute requests or prompt the signatory to take action when necessary. Managers can even prioritize certain contracts to keep them moving through the company.
3. Take advantage of automatic alerts and reports.
Create an alert system that generates automatic reports when documents have gone unsigned for too long. When your team has actionable reports, they can alleviate problems or delays before they become major issues.
4. Create smarter workflows.
Assign responsibilities in such a way that different team members have different tasks. Then responsibility for approval or signatures doesn’t fall on one person and create a potential bottleneck. In fact, with the right contract management software, you can assign specific pathways for approval to avoid delays.
5. Assign due dates for signatories.
This implicit prompt makes people take action instead of let documents sit in their inbox. Deadlines can also be used to alert appropriate team members for contract renewals. With this forethought, contract expiration doesn’t cause lost or delayed revenue.
Don’t let delays harm your business. Automating your signature process makes each contract move faster. It also gives you more insight into delays and bottlenecks. If you want more information about how our software can help, contact us today for a free demo.