If a brand new company or one that’s been in existence for a long time hasn’t managed the renewal of contracts efficiently, there’s a good chance that it will cause the company to fall behind in many ways.
If you don’t get notified in time of the renewal date with your business partners, vendors, customers, partners, etc. and so on, you could be stuck with a contract that doesn’t bring the business any revenue and could even be costly. Poor contract management renewals can result in an organization not being able to evaluate the relationship in a way that is objective to evaluate its value, negotiate the conditions, and so on. So what are the best methods to get the opportunity to renew contracts with vendors?
Make Use of The CRM and CLM Platforms
Then, the powerful analytics of CRM platforms can provide insights into the advantages of every contract. CRMs should work with the contract management tools. In addition, CLMs monitors the entire term of a contract to decide if it’s worth renewing.
In addition, integrations will provide information on value, efficiency, and contract deadlines. By having this data, each side has the data they require to decide if a contract is beneficial to teams.
Establish and Maintain Relationships from the Beginning
First, renewals take place long before the deadline is set to an end. They begin when the contract is first written. Communication is an essential element at the beginning of the relationship. Once the relationship is established, constant communication is an important next stage. After everyone has signed the contract, keeping the dialogue and ensuring that both parties are happy increases the likelihood of renewal.
Renewals are usually the most convenient choice for both sides. In the first place, they don’t require one party to look to find a replacement supplier, and the other party is still able to earn revenues. But they’re not worth it if their relationship isn’t good or the contract isn’t worth it.
Keep All Stakeholders Informed
Legal teams often work in silos when it is time to renew a contract. Unless the contract has a specific purpose for the legal department, only this should not be the case.
In deciding whether it is appropriate to prolong a contractual agreement, legal teams must consult with all relevant parties who might be in the loop regarding the decision. This includes finance teams that might need to approve spending, departments that use the product or services being provided, and other departments involved in drafting the contract in the first round.
This will ensure that the departments are all happy with the decision and that there are no unexpected negative surprises.
Establish Automated Alerts
Smaller teams might be capable of keeping track of the contracts by using calendar reminders. However, as a business grows and contracts are added, the number increases, reaching the thousands or even hundreds of thousands. There is no calendar that can efficiently and systematically manage all of these reminders.
This is where contract lifecycle management, also known as CLM, is an important element. A quality CLM has automated alerts that notify renewals will be scheduled far ahead of their deadlines. Of course, deadline summaries offer insight into the futures contracts that are due to expire. This way, you have plenty of time to plan in advance for the possibility of renewal.
Build The Right Contract Renewal Team
In the midst of hundreds of thousands of contracts as well as documents with all their terms, obligations, and crucial dates could cause a multitude of issues in identifying the contract clauses, contact details, and email messages at the time you need them the most.
It’s not necessary to waste time. With the most effective security features for contracts, such as single sign-on and permissions-based access, it is possible to keep your employees fully engaged in contracts, which means that only those authorized can access the correct contracts at the appropriate times. This will assure you that each contract is managed in a clear and transparent manner to support the organization.
Conduct Annual Reviews
While this may seem to be a simple concept, however, many businesses do not conduct reviews of contracts, which could be easily done every year at a minimum. A review of contracts can help verify that a company is making the right choice when renewing a contract and if it adds enough value to the venture.
Modify The Contract
Through regular refining of contracts, businesses can determine the changes that need to be made before renewal and whether the contract will need to be updated to make it profitable for the business. Ultimately, businesses can count on their revenue growing significantly, with the added benefit of seeing their company grow to new heights.
Establish A Standard Procedure in Place
Lastly, establish a uniform process in place to renew agreements. It’s fine and good making sure that certain contracts are renewed promptly; however, if the process cannot be replicated, your business will continue to suffer. Once you’ve created a system to handle contract renewals, make sure you write it down in a contract playbook or make it clear to all involved parties to ensure their adoption.