Contract lifecycle management (CLM) is a critical business process that too many businesses do not pay due attention to. Neglecting CLM can have several consequences, not least the loss of revenue and potential operational difficulties when vital contracts lapse without anyone doing anything about it.
While avoiding errors and improving your sales contracts will not prevent CLM issues from occurring entirely, it will put you in a better position to manage and get the most possible value from your contracts.
How can you improve your sales contracts, and what are the most common errors you should look out for?
How to improve your sales contracts
Before we explore the errors you need to keep out of your sales contracts, let's look at how you can improve them and reduce the risk of errors occurring in the first place.
Use contract management software
Embracing contract management software is one of the biggest potential game-changers at your disposal. You will save time, money, and effort in dealing with drawing up contracts, negotiating changes and ensuring you know where they are once they have been signed and saved or printed.
Contract management software will enable you to create incredible contracts, every time, by:
- Providing you with pre-built templates around which you can populate your contracts with relevant, rich data.
- Giving you content libraries to help you ensure you have the right contract on hand every time.
Automate as much as you can
Automation is another benefit of using contract management software. Still, it is such a huge benefit that we wanted to draw attention to it here rather than as a bullet point in the above list!
Automating your contracts means you do not need to write them yourself or fork out cash for a lawyer to do so! That will not only save you a lot of time, it will also make your contracts free from human errors and thereby reduce legal risks.
Automation is a perfect way to free up time for sales reps, so they spend less time on mundane manual tasks and more time on actually closing deals and nurturing their relationships.
Allow people to sign electronically
This is another benefit you will get with contract management software as standard. Yet, we all know old school people in old school businesses who still insist on printing everything and signing a physical copy of a contract.
From your perspective, allowing and encouraging people to sign electronically is all about removing barriers to success. If you send someone a contract, sharing a link they can access to sign electronically is giving them something they can do in 10 seconds. Contrast that with "please print, sign, scan, and email back."
What would you rather do?
Ensure your contracts are compliant for use in relevant markets and industries
We have all experienced delays in getting contracts signed because they were not compliant with laws in a specific geographical market or set of industry requirements. Whether you use contract management software or try and draw up your contracts yourself, getting this right is a must!
Another point here on using contract management software. Ensuring compliance often leads to contracts becoming filled with jargon. The passage I mention someone sent me in my recent article about building trust with contracts was born out of someone being nervous about protecting intellectual property, which can be a complex area. The templates and content libraries (and also contract automation) available with contract management software will enable you to nail compliance and simplicity every time!
5 errors to look out for in your sales contracts
Now that we know how you can improve your sales contracts, let’s look at five common errors you should look out for, even if you are using contract management software!
Error #1: Using incorrect product and pricing data
If you choose to use contract management software, ensure you choose one that integrates with your customer relationship management (CRM) tool, and you will easily avoid this problem.
It is common for businesses to send tailored proposals to leads and have various conversations and add many incentives to sweeten a deal. Then the contract comes in, and what was discussed is not what is written in black and white.
Not only do you have a potential trust issue, but you are also faced with making an amendment before the contract is reviewed again and eventually signed.
Keep your CRM records up to date and ensure what you discuss with your leads is what goes into their contract!
Error #2: Not providing relevant legal documentation
You might be surprised just how many contracts get sent where things like basic terms and conditions, payment terms, and notice of termination clauses are missing.
These do not diminish trust so much as make it look like you are stuck in amateur hour!
Create a checklist to ensure everything that should be in your contract is in there. Better yet, use contract management software and templates to guarantee they are in every contract you send!
Error #3: Not including the correct signatories
You would think by now that there have been enough series of Hired or Fired that people would not still negotiate with the wrong people, but it still happens.
Even more embarrassingly, many people still send contracts that do not name the correct signatories, which is up there with agreeing on a deal with someone who has no authority to agree to it. Do not put yourself in a position where you are trying to deal with some random in department A rather than the person who can actually make the call.
Error #4: Not having a simple means of resolving any issues
Every contract you send should clarify the process for resolving any issues between the parties involved. Why do you think so many contract disputes still end up in court? It is because the contract did not make it clear what processes needed to be followed, so it is left up to lawyers and judges to interpret what is written and decide your fate.
Admittedly, talking about dispute resolution is not the fluffy and happy thing you want to do when trying to do an exciting deal, but will save you a lot of grief later.
Error #5: Saying too much when a little will do
This is not a technical error in the context of a sales contract, but it is still something you would do well to remember.
There is no international law saying that contracts need to be 15 pages long as standard! If your contract is only a page or two, and that is all you need, then you are all good. Remember what we said earlier about creating barriers? If your contracts read like they need the examination of a forensic lawyer, you are not getting them back signed in a hurry!
Improving your sales contracts, starting now
Improving your sales contracts is one of the easiest, most pain-free ways to have a significant, instant impact on your business. Not only will you improve your efficiency, but you will also find it much easier to put deals in place and get contracts signed to start generating revenue. Get this vital part of the CLM cycle right, and you will make it much easier to deal with any potential issues down the line.