May 30, 2022
5 errors in your sales contracts and how to fix them
Your prospect is finally ready to sign. It's almost time to celebrate the close with your sales team. You can feel it. And it's not just happy ears.
You send the sales contract over to your contact and... crickets.
After you follow up several times, they finally do respond, saying that the sales contract your team sent over is full of errors and that the contract language doesn't match what you'd discussed on your sales call.
How could this have happened? And how can you improve your processes to create error-free sales contracts?
Here are 5 of the most common errors in sales contracts and how you can fix your contract lifecycle management to make sure they never (or at least rarely) happen.
#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'll easily avoid this problem.
It's 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 to ensure what you discuss with your leads is what goes into their contract.
#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.
#3: Not including the correct signatories
Many people still send contracts that don't name the correct signatories, which is up there with agreeing on a deal with someone who has no authority to agree to it. Don't put yourself in a position where you're trying to deal with some random person in the department rather than the person who can actually make the call.
#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.
#5: Saying too much when a little will do
This isn't a technical error in the context of a sales contract, but it's still something you'd do well to remember.
There's no international law saying that contracts need to be 15 pages long. If your contract is only a page or two, and that is all you need, then you're all good. Remember what we said earlier about creating barriers? If your contracts read like they need the examination of a forensic lawyer, you won't get the signature quickly.
How to improve your sales contracts
To keep these errors out of your sales contracts, let's look at how you can improve your processes and reduce the risk of any mistakes occurring in the first place.
Use contract management software
Embracing contract management software is one of the biggest game-changers. You'll save time, money, and effort when drawing up contracts, negotiating changes, and ensuring you know where contracts are once they've been signed and saved.
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 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. Automating your contracts means you don't 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 traditional businesses that 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."
Ensure your contracts are compliant for use in relevant markets and industries
We've all experienced delays in getting contracts signed because they weren't 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!
Create error-free sales contracts—now
Improving the accuracy of 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'll also find it much easier to put deals in place and get contracts signed to start generating revenue. Get this vital part of contract lifecycle management right, and you'll make it much easier to deal with any potential issues down the line.