Modern businesses run on SaaS subscription products nowadays. This means that the contract management renewal can become a full-time job. How can you make this easier? It’s not easy to find out a few days late that a vendor has automatically renewed your contract. This means you are locked into an expensive agreement for the following year.
Contract renewal is when a contract is due to expire. This is when counterparties can renew their contracts based on current terms or renegotiate and enter into a new contract. Auto-renewal is possible for some contracts when utilizing online contract management software. However, it is essential that all parties make time to review the contract at least 30 days before an active renewal occurs. While automatic renewals may save time, they can also put all parties at risk of being locked into a contract that is not promoting contract value.
The renewal is an important part of a contract’s lifetime. The renewal opportunity requires you to review the contract’s history. You should also consider the benefits and drawbacks of a renewal. These are some guidelines to help you capitalize on the contract renewal opportunity.
Communicate and Build Relationships from The Beginning
First, renewals are considered well before the deadline. They begin the moment the contract is first written. Communication is the foundation of any relationship.
The next step is regular communication. After everyone has signed the contract, it is essential to maintain communication and make sure that both parties are happy. This will increase the likelihood of renewing the contract. Renewals are usually the most straightforward option for both sides. First, neither side has to look for a new supplier. The other side still gets revenue. If the relationship is not good or the contract isn’t valuable, it isn’t worth it.
Do Not Delay Reviewing Your Contract Until It Is Time to Renew.
Understandably, teams often wait until the very last minute to review the contract terms that are up for renewal. Given the amount of work procurement and legal teams do in-house, it can be difficult to get ahead of the curve and focus on strategy and optimization.
It doesn’t have to be this way with the right contract management software. A platform that uses AI to manage contracts can dramatically reduce the time required to draft and review agreements. This allows lawyers to spend more time doing what they love: legal analysis.
It might not be the best thing for the company today that what worked well one year ago. To provide sound legal advice, counsel needs to take time to review the terms of each contract and consider the business’s current needs. Your lawyers will be able to do more with less time spent on manual drafting and searching through individual clauses.
Establish Automated Alerts
With calendar reminders, smaller teams might be able to keep track of contracts. As a company grows, so does the number of contracts. These can easily grow to thousands or even tens of thousands. It is impossible to manage all of these reminders efficiently and in an organized way using a calendar.
Contract lifecycle management, can help you to manage your contracts. CLM software should provide automated alerts to notify you of renewals well in advance of their deadlines. Deadline summaries give visibility to all contracts about to expire. This gives you plenty of time for preparations to renew your contracts.
Electronic Repository for Store Contracts
It’s easier to find contracts if they aren’t stored in large file cabinets or on employees’ desks. It is easy to locate contracts by digitizing them and placing them in a repository.
The systems can also provide an electronic repository. They also have the ability for metadata to be added to documents. You can add the expiration date to a metadata field. This allows you to view all expired and soon-to-expire contracts with just one search.
Automated Data Collection and Tracking
What are you doing to track compliance clauses and other critical information in contracts? Do you keep track of these terms? You’ll be late if you don’t keep up with the deadlines and are constantly signing agreements. Have you checked that your vendors comply with the new regulations before you sign renewals? Are you renewing for convenience and hoping for the worst?
Use Electronic Signatures
After the contract is identified, employees can electronically send it to the relevant parties for signatures and review. This will save you money on postage and reduce printing time and allow for faster scanning.
Systems can integrate with electronic signing tools. This allows authorized employees to securely send contracts from the repository directly to the relevant party for electronic signatures. The risk of tampering is reduced by restricting access to contracts and only allowing authorized individuals to sign them. The system automatically saves signed versions in the repository once they have been signed.
It’s hard to take action if you have to search manually for every piece of information in your contracts. A platform that uses cutting-edge natural language processing algorithms and AI can speedily complete the tedious task of finding, compiling, presenting, and reporting information. This allows you to focus on what is essential: deciding what to do.