#Streamliningcontracts

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How to Streamline Your Contract Scoring System

Your contract scoring system is an incredibly important part of your business operations. When every contract has a score, you can easily measure your company’s health and find areas for improvement. Every scoring system should be built around the KPIs, or key performance indicators, your business prioritizes — and you can learn how to get started here. If you're slogging through manually scoring each contract, however, chances are that you're spending way too much time on the process.  Are you struggling to streamline your contract scoring system or find yourself wondering if it's causing more trouble than it's worth? Try some of these important strategies to streamline the process. 

1. Use the right contract management software.

Your contract management software makes a big difference when it comes to every aspect of the contract creation and management process, including contract scoring. Look for contract management software that will help generate that score for you. For example, your software might generate a basic score based on standard information fields, allowing you to see at a glance what risks could be involved in a specific contract. If your contract management software doesn't provide that basic service, it could be past time for an upgrade! Look for contract management software that offers machine learning capabilities so you spend your time where it matters most.

2. Create strict "standard operating procedures" for your contract team.

Every client has unique needs and may have a unique approach to your contract. But that doesn't mean that you can't start with a basic set of standards. Create a set of standard operating procedures that will give your internal negotiators a starting point. Those standard operating procedures should already have a base score in place. When your negotiators use a standard contract, they will then automatically know what the contract's score is. You may also have several basic alterations to your standard contract in place so that you can easily scale it for clients of different sizes or with different needs. The more detailed your list of standard operating procedures or your departmental playbook is, the more easily your entire team can access that information.

3. Make a list of the biggest red flags for your business.

As you create more contracts for your business, you will probably develop a better idea of what not to do with your contracts. Start looking for glaring red flags that could spell disaster for your business — or at least for this specific agreement. These are anything that jeopardizes the contracting lifecycle, the performance of contract obligations, and the contract’s ACV: the three biggest KPIs for any contract. Take the time to write out a list of the biggest red flags. To help streamline the contract creation and negotiation process, consider offering alternatives to many of those red flags and how to negotiate around them. When these flags do show up in a potential contract, your negotiators will know that they're unacceptable. They’ll also get a better idea of how to fix them on the spot in a standardized, easy to follow formula. 

4. Simplify your contracts.

If you're struggling with contract scoring, the possibility exists that you're looking at too many elements. Some industries, like the insurance industry, need complex contracts that cover every potential detail. Others, however, need only cover a handful of elements to ensure that your business is covered and the services you'll provide laid out. If you find that there is unnecessary complexity in your contract scoring process, the contracts themselves may be to blame. Sit down with your legal team and see what elements can be removed from the contracts — or at least which ones can be simplified or standardized so that you don't have to worry about adding those elements to your scoring process. 

5. Keep track of when contracts are due to expire and revise your expectations ahead of time.

When you begin the contract scoring process, you may discover that existing contracts are creating excess risk — or perhaps that they're simply failing to deliver the payout your business had hoped for. Your contract management software can be a big help when the time comes to renew those contracts. Instead of having your software notify you at the last minute, have it notify you well in advance of the contract's expiration date. Then you will have plenty of time to revisit the contract and design it in a way that works better for your company.  Keep in mind that revisions to the contract will likely require a new negotiation period with the other company or individual. Failing to take on those negotiations, however, could lead to both of you automatically signing a new version of the old contract — and that means your business will continue to assume both that risk and the lack of profit from that contract. Learn more about how to backward-design your contract renewal process for smoother sales. Streamlining your contract scoring process is a critical part of managing contracts and ensuring that they meet your business's overall needs. When you accept too high a risk or fail to score your contracts, you may end up taking on contracts that simply do not generate the profits your business needs — or worse, contracts that cause damage to your business. If you're ready to start working with new contract management software that is more likely to fit those needs, including basic risk assessment scores for every contract you enter, start a free trial today to learn more about our solutions.  Read the full article

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5 Tools Your Team Can Use to Improve Your Contracts' Strength ASAP

The strength of your contracts is incredibly important. Weak contracts won't benefit your business — and they could, in fact, lead to unexpected failures. Luckily, you don't have to flounder on your own to create stronger contracts. Start by learning more about what KPIs are and how to score your contracts around them. Then create and utilize these five key tools for your business to make your contracts stronger and more effective. Many of them, you can start using immediately!

1. Boilerplate Contracts

For the most part, your business uses the same basic standards every time you write a contract. Your team knows what you're looking for, and you don't have to reinvent the wheel every time you write a new contract. There's nothing wrong with using the same basic language every time you take a new contract to a client — especially a client with basic needs that fit the common requests seen by your business. Building a strong library of contract templates — and deciding what your boilerplate provisions should be — ensures your contracts have a high score from the start. Take the time to put together boilerplate contracts that fit your most common contract requirements. You don't necessarily have to use those contracts directly and in their entirety every time, but they will give you a starting place — not to mention making it easier to ensure that your team doesn't miss anything as you put together a new contract. 

2. Acceptable Negotiation Thresholds

Some clients will sign that boilerplate contract as-is. Others will want to negotiate. When the time for negotiation hits, however, you don't want to leave your team floundering without direction. So, create an important list of negotiation thresholds. These thresholds should always tie into the KPIs you identified at the outset of your contract management process. They might include: Acceptable negotiation thresholds for pricing. How low are you willing to go? What elements might a customer remove from their contract to take that threshold lower? Pricing parameters will also need approval from your company’s financial representative, so get them involved early.Contract term lengths. Are you willing to extend the length of a contract for a new client? Alternatively, is a contract with a shortened term profitable enough at a certain contract value? What about an existing client, especially one who has been with your company long-term?What features you're willing to offer and how they impact the price range. Depending on the type of contract that you're writing, this could include details like warranty, customer support, or service.  Once you have a solid list of your negotiation thresholds, your team can use them to shape their contract negotiation efforts. This can make it easier for the team to negotiate contracts on their own. Not only does this streamline the contract management process, but it can also increase customer confidence in your team. 

3. Living Documents for the Approval Process

Sometimes, you will need to make unique changes to your contracts to fit a specific customer's needs. When those unique approvals need to be made, who takes care of it? What does the process look like? Create a living document that you can alter easily: one that shows your team and your sales representatives exactly what will happen to get those changes approved. This accomplishes several things: Lets your negotiation team know what steps they will need to take.Specifically lists the individuals responsible for approving unique changes, which can let your team know exactly whom to go to. Helps give your sales representatives to communicate a timeline to the customers. That helps everyone understand how long they may have to wait for the contractual changes they want. Learn more about how to streamline your company’s contract approval process so contracts never sit in someone’s inbox.

4. A List of Non-Negotiable Contract Elements

There are some details your business simply isn't willing to give on. These are elements that must be contained within your contract in order for you to protect yourself or your customers. Make a clear list of those elements that are non-negotiable. This can substantially streamline the contract approval process by letting your negotiation team know exactly which elements you won't be willing to give in on. Having an ironclad list also reduces friction between your team and the sales or renewals team when commissions are on the line.

5. A Scheduled Reporting Tool for Potentially Poor Contracts

When you automate your scoring system, you'll start to find that it's easier to keep up with your contracts as a whole. As part of your process, make sure you include a reporting tool and scheduled reporting systems. As a result, the people who need to track actions on those accounts will receive regular updates and reports. That will make it easier for your business to keep up with contracts that score poorly or that are at risk for causing danger to your business. With these reporting tools, you will ensure that no contracts fall through the cracks or cause potentially unexpected problems. Also, your team will get a better look at the elements that need to be changed in future contracts, especially as existing contracts come up for renewal. Are you struggling to streamline your contract approval process? Do you need to make your contracts stronger? With these five important tools, you can both streamline the contract negotiation process and ensure that your contracts are designed to meet the needs of your business. By further empowering your team, you'll find that they're able to more easily negotiate exactly the contracts your business needs in order to maintain a strong presence in your industry.  Read the full article

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Steps to Streamlining Your Contract Approval Process

Every day a potential contract sits in somebody’s inbox waiting for approval, is a day your form isn’t making money on the deal. Each day also gives your potential customer more time to question their decision to trust you. Too often, the contract approval process is cumbersome, and functions as a bottleneck for the sales team. Salespeople are anxious to close deals to earn commissions, and management needs the sales team to be able to move on to other prospects as quickly as possible. Contract management software can help streamline your current contract approval process.

Diagram Current Process

The first step towards creating a more efficient contract approval process is to understand how your current process works. You might think you already understand your current process. However, chances are there are many informal steps that aren’t listed in your set of standard operating procedures. You need to diagram your current process. Ask every person in the process what they understand the approval process to be—document both the formal and informal steps. For example, one typical informal step in a contract approval process is when a salesperson contacts the assistant for an executive with signoff authority to check on the status of the contract. You can’t improve the process until you fully understand what is happening today.

Ask Why for Each Step

Once you know what each step in the process is, you need to ask for the reason behind each step. Sometimes the reason might be that things have always been done this way. Some steps might be to satisfy the legal department, and other steps might be because individual executives want to be kept in the loop. Once you start asking about the “why” for each step, you will start seeing steps that you can eliminate.

Limit Approvals to One Person Per Department

Next, it’s time to start making some changes. Start with eliminating duplicative steps. There never needs to be more than one person in a department signing off on a contract. Often the reason multiple levels of people feel like they need to sign off on a contract is because of a lack of an official communication and documentation system for contracts. Contract management software will allow you to create an audit trail that managers can quickly check. Instead of having a document in a physical inbox, you can use the software to digitally “check-out” the contract. Anyone will be able to use the software to check the status of the contract.

Create Written Procedures Covering Each Step

While you are creating a new, streamlined contract sign-off procedure, you need to meticulously document each step. Informal processes generate more opportunities for mistakes. They also result in wasted time and energy. By creating a new formal set of written procedures, you can eliminate the waste of informal procedures. The new standard operating procedures for contract approval should be distributed to everyone involved in the process.

Use Automated Alerts and Document Tracking

Moving physical paper around is dangerous. If you use contract management software to manage the contract approval process, there is no physical paper to get lost. It also allows you to take advantage of digital document tracking and automated alerts. Executives will receive an automatic alert when a contract is ready for review. Sales and operations will get an alert when the deal has been approved. These alerts and tracking features eliminate the back and forth that often goes on while everyone is waiting for the contract to get approved. You can’t afford to use an inefficient contract approval process. When you streamline this process, you will improve your cash flow, and you will create a better first impression for your new clients. Read the full article