5 Contract Management TRAPS - SpringCM€¦ · manually managing contracts throughout the entire...

S A L E S E D I T I O N

5 Contract Management

T R A P SThat Can Be Avoided

25 CONTRACT MANAGEMENT TRAPS THAT CAN BE AVOIDED

Table of ContentsIntroduction ...................................................................................................... 3

The Slow Contract Process and the Effect on your Company ....................... 4

The 5 Contract Management Traps ................................................................. 5

#1 Someone has it, but who? ................................................................... 6

#2 Negotiating Back and Forth ................................................................. 7

#3 The Waiting Game ................................................................................ 8

#4 Outdated Tools ..................................................................................... 9

#5 Multiple Versions ................................................................................ 10

The Problem: Manual Contract Management ............................................... 11

Solution with Automation .............................................................................. 13

Conclusion & Contributors ............................................................................ 15


IntroductionJuggling the workload that comes with managing contracts is a problem every department faces. The same goal is shared by everyone at the company: do your job, do it well, and advance your company financially and reputationally. However, different departments have different ways of reaching that goal.

The key to successfully closing deals is to keep the contract process moving. The faster you can close a contract, the quicker you can move on to the next deal, which ultimately leads to more opportunities and revenue for the company.


A Slow Contract Process and its Effect On Your CompanyProblems become apparent when the contract process begins to slow down. Contract delays can have a negative effect on the company’s revenue, its reputation, even the reputation of the individuals involved.

According to the 2015 State of Contract Management, 46% of those surveyed said their contract process takes more than four weeks to complete. More than 43% of those said their deals stalled due to their contract approval process.

The success of a salesperson is measured by the success of their customer. It’s the prerogative of the salesperson to meet the needs of the customer. That includes listening to what the customer needs, finding what you can do to help them (building the contract), then delivering the solution in a timely manner (signing the contract). Delays in the contract process can affect a sales person’s reputation with that customer. Even worse, it can lead to low morale amongst a sales team, knowing they’re unable to to reach their goals.

The company also suffers from delayed contracts. Putting a deal on hold could mean losing revenue that was originally expected. On top of financial loss, pushing deals into the next month, quarter, or year can throw off reporting within a company. The longer a contract sits idle, without signature, the greater the chances are of losing that deal. The customer could be using that time to explore other options.


5 TRAPS DELAYING THE CONTRACT PROCESS


#1 Someone has it, but who?

It’s very common to lose track of where a contract is during the back and forth of the negotiation phase. Chances are someone has it, but doesn’t know it. When the contract is finished with one phase, it’s passed on to the next person or department who handles the next step. But it may not be top priority for that next person in line, or perhaps they don’t even know it’s been sent to them and it’s their turn to take action.

A contract can sit idle in someone’s possession for weeks. And as it gathers dust, your company is losing revenue and opportunity. To find that contract, those involved have to look back on the history of where that contract has travelled in order to track it to its right location. Then you have to get the attention of the person with the contract, by phone or email to essentially wake them up and request action. These steps are repetitive and time consuming. All the while, you could be using this time engaging with more customers and handling more deals.


#2 Negotiating Back and Forth

The negotiation process is inherently the longest part of the contract process. This involves both parties communicating back and forth, sharing their respective edits to the contract, a process also known as redlining. You may be aware your sales and legal teams are involved with the contract, but you might forget that your customer has its own team looking at the contract, and also making changes.

This can add more changing variables to your contract process. A sales team can send a contract out to a customer believing it just needs to be reviewed and signed, when in reality it may have to go through 10 more channels, including managers and lawyers, before it does get approved and signed. Once you think you’ve updated the contract with everyone’s changes, it’s not uncommon for one more person to chime in with more changes, again dragging the process out.

Without clear visibility into who has (or has not) reviewed the contract, this process can go back and forth for a long time, wasting valuable time that can be used on other opportunities.


#3 The Waiting Game

As mentioned before, your sales and legal teams are both working together during the contract process. However, they may not be working hand-in-hand to keep the process moving. While a salesperson works with the customer experience in mind, the legal team is picking apart this contract, word-for-word, looking for potential risks that could harm the company.

As a sales person, you want to be in control of the deal, but that can be hard when it feels like the contract has been sitting in legal forever. Remember, the legal team is there to protect your deal and your company. With most redlining happening during the legal review, frustrations can only get worse knowing that every change needs to be re-approved, and sometimes those changes are being sent via phone, email or fax, making the process much longer than it needs to be.


#4 Outdated Tools

Your tools in the contract process can be the deciding factor in how fast you can close contracts.

Still, the most common way companies are doing business with contracts is with paper. That’s because some still believe that paper is more legitimate. When you throw paper in the game, you’re forced to scan the document then email it, or fax the document to the other party. Then the receiving party has to print the document, sign off on the changes then scan, email or fax it back. Imagine repeating these steps for each change made to the contract and for every contract your company deals with.

One of the main reasons companies still use paper is for the signature. Outdated thinking tells us paper and ink are the only legitimate ways to put a final stamp on a contract. Unfortunately that physical signature requires more printing and scanning.

Even without paper, companies are using multiple programs to make edits to and send out contracts.

The most time can be spent building the actual contract itself, using a program like Microsoft Word. While many contracts can be similar, no contract is exactly the same, which mean the process of building the template has to be repeated for each contract.


#5 Multiple versions

74% of the companies we surveyed said they still use Microsoft Word to redline their contracts.

When using outdated tools, you could be in danger of having multiple versions of a contract out there.

More than 50% of companies we surveyed are using email to help manage their contracts. Even if you are trying to save paper, each time you scan and email a contract, your putting another version of that contract out there. With that, you run the risk of getting these versions mixed up, using an old version of the contract which opens the door to risks that the legal team had already worked to avoid.

This can create confusion between your sales and legal teams if one team has a different version than the other. It’s a common problem for someone to save a contract onto their desktop, and let it sit there before making their needed alterations and passing it on. In the meantime, other updates could have been made by other people, which are not reflected on that version of the document.

74+26+L74% still use Microsoft Word to redline


THE PROBLEM: MANUAL CONTRACT MANAGEMENT


There’s one common denominator in all 5 of these contract traps: they directly result from manually managing contracts.

Over 71% of professional we spoke to tell us they are manually managing contracts throughout the entire process.

Manual contract management involves using many programs for keeping track of contracts, that includes common practices such as:

• Keeping track of contracts with Excel spreadsheets

• Building and editing contracts using Microsoft Word

• Sending contracts via email or fax

• Storing contracts on desktops or hard drives

71+29+L 71% manually managing contracts


Solution with AutomationFinding an automated solution can immediately alleviate bottlenecks in contract management, providing features that can streamline the process:

Central Repository

With an automated solution, you would be working out of just one program, in one place that everyone involved can access. Having the contract housed in one place during the negotiation phase is much better than emailing or faxing changes to one another. Both parties will go to the same place to make edits to the deal, eliminating the need to use paper and the potential of having multiple versions.

Template Generation

No more wasting time building each template for a contract. An automated solution provides you with templates that can be used and adjusted time and again.

With a clause library available, a seller can search for and select pre-approved clauses that answer common contract questions and automatically insert them into the template. This allows salespeople and managers to handle the basic contract questions without tracking down VP’s or the legal team.


Tracking

An automated solution can offer transparency into the entire process so everyone involved knows the status of the contract and where it is. Hold people accountable with the ability to view and extract the contract history at any time. This solves any discrepancies that can delay the contract process.

Notifications

If a contract is sitting idle in someone’s possession, you have the ability to nudge that person and provide direction to keep the process moving. To get ahead of any delays, automatic reminders can be set to keep people on top of deadlines, or alert people when it’s time to renew a contract.

Negotiation Tools

Redline changes can be made directly on the contract, without the need for an outside program like Microsoft Word or Google Docs. This eliminates the need to save the contract anywhere else and the potential for having multiple versions of the contracts in circulation.

Easy Signature

With eSignature, you no longer need to print out a contract to sign it by hand, only to need to scan it and email it back. You can provide a perfectly legal signature with just a click of the mouse. The time, place and person are all tagged within the signature, providing a stamp that is secure and enforceable.


ConclusionIn a broad view, manually managing contracts can seem like a good idea —using programs and communication methods that people know. But in reality it is throwing bottlenecks into the contract lifecycle, minimizing a salesperson’s potential to close more deals and reducing any potential for your company to bring in more revenue.

If you are passionate about your performance as a salesperson, and the bottom line of your company, then an automated contract management solution could be the key to success.

It is an all-in-one way to expedite your contract process while maximizing revenue for your company, and show off your efficiency and commitment to the customer.

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Speak to a Contracts ExpertWe know you’ll like what SpringCM has to offer. We can help you deliver the right collateral to the right people at the right time.

Mike Newlin Account Executive SpringCM

Jake Pinkus Account Executive SpringCM

Dan McNamara Account Executive SpringCM

Eric S. Freibrun Law Offices of Eric S. Freibrun, LTD.

Emily Burger Attorney

Contributors

http://www.freibrun.com/

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