How to Identify and Correct Poor Contracting Strategies

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contract practices

Three crucial steps toward better contracting strategies are asking tough questions, analyzing channel processes by department and building better contracting processes.

Each stage flows into the next, so a disconnect anywhere within the process puts contracts at risk. For that reason, companies need to seek an automated and integrated solution that unites each aspect of this process to ensure that they develop high-quality contracts that don't leave any money on the table. The system should also connect each department involved in the contracting cycle to ensure speedy, accurate approvals.

Companies should seek eight core capabilities when choosing a CLM solution:

1. A centralized library of templates and legal terms and clauses. Companies should implement a solution with a unified repository that holds the most up-to-date legal terms and templates. That way, all departments can access the database to ensure legal language remains consistent throughout the contracting process. Not only does this ensure contract consistency, but it also reduces the burden on legal teams and streamlines the process.

2. Automate workflows. It's time to ditch the spreadsheets and opt for an automated system for authoring, reviewing and approving. By choosing an automated system, companies save manpower and reduce the chances of human error within their contracts.

3. Mobile access and e-signature. As more and more employees go mobile, it's crucial that key players can access important contracts on-the-move to speed up the approval process. For that reason, mobile access plays a huge role in modern-day contracting. It isn't simply the ability to view a contract that's important, but team members now need the ability to manage the entire process while on the go.

4. Validation of incentive transactions. Contracts are full of events and qualifying terms. However, most organizations simply can't reconcile transactions and payments against actual contract terms. Connecting contracts with their transactions is where most contracting processes fall flat.

5. Calculation and tracking of payment accuracy. All too often, companies overpay or underpay their channel partners due to an inability to track and calculate accurate payments. For that reason, companies must seek a solution with the ability to automatically manage payments. This removes manual errors and ensures consistency throughout your partner network.

6. Link performance with contract terms and conditions. Organizations must be able to identify the effective terms and conditions within their contracts and the ones that fall flat. By utilizing the best conditions, companies can create more impactful contracts and eliminate the terms that fail to produce revenue. Organizations should seek a solution with advanced visibility into partner contracts in order to dig into effective terms and conditions.

7. Milestone management. It's not uncommon for companies to enter into a contract, forget about it and then miss a renewal milestone—forcing them to auto-renew or end an agreement, potentially against their wishes. This can cost companies millions of dollars, which is why organizations should seek a solution with milestone management capabilities that alert them about looming deadlines.

8. Analytics. Analytics are a key piece in the contract management puzzle. Without visibility and insight into contract data, organizations cannot identify contract successes and failures, assess partner performance, pinpoint roadblocks in the contracting process and decrease total cycle time.

In conclusion, it all boils down to three big steps: ask tough questions, analyze channel processes by department and commit to building a better contracting process. By implementing an automated and streamlined contract management system to better track channel partner relationships, companies set themselves up for success by decreasing operating costs, increasing visibility, reducing compliance risks and improving their financial performance as a whole.

Joe Alphonse is a product marketing manager at Revitas, which specializes in optimized profitability and enterprise-class contract, revenue and compliance management software. He is a blogger at www.revitasinc.com/blog.