First Quarter Has Ended: Do You Know Where Your Contracts Are? | SalesAndMarketing.com
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First Quarter Has Ended: Do You Know Where Your Contracts Are?

Best Practices in Contract Management

By KEITH PETERSON

Is every quarter-end a contract free-for-all at your company? As a sales leader, do you know the status of every contract in process? Do you have the confidence to forecast contract approvals accurately every quarter? If these questions sound familiar, you are not alone. In fact, estimates indicate that 18 to 20 percent of the sales process is consumed with contract creation, negotiation, review, revision and approval processes. Studies show that the longer a contract takes to close, the less likely it is to conclude successfully.

Navigating the twists and turns of a high volume of sales contracts poses a challenge to the best sales teams. However, the speed and success of the process will be directly impacted by other forces: the prospect’s organization; legal and executive reviews; and compliance issues among others. Managing sales contracts properly can help shrink the sales cycle, improve cash flow and reduce the risk of litigation and penalties.

Good News: You Have Control of the Sales Contract Process

Because the majority of steps occur inside your company, you control most of the sales contract lifecycle. Imagine seeing a 50 percent improvement in the contract cycle. That could reduce sales cycle time by 9 percent and means you can close 11 percent more deals with the same resources. Fortunately, there is a better way. The following best practices for sales contract management provide guidance to overcome the typical sales contract chaos.

Since contract management solutions range from simple to extremely complex and sophisticated, best practices dictate that the most successful implementations focus on getting started quickly, gaining success early, and proving ROI. For example, take a few important contracts that are still in the early stages. Automate these contracts to start and add additional contracts later.

Alternatively, you can begin with contracts of one division or one product line in the company. Use this pilot project to remove process kinks and focus on the contracts rather than being overwhelmed by the process. Get everyone’s feedback before you finalize the process. Make sure everyone on the team, including customers, knows that you are taking steps to solve the contract management headaches of the past.

Take Contracts to the Cloud                 

Unlike traditional software implementations, a cloud solution (also called Software-as-a-Service, SaaS, or Web-based solution) enables you to begin sales contract automation with a small department, perhaps five individuals. Rather than spend excessive cycles on system planning and testing (as required with on-premise software), a cloud sales contract solution allows your initial team to quickly set up the business rules and processes and begin using the solution. You will know within a few weeks how successfully the cloud solution supports the business, and you can assess potential ROI of the solution as well as how much it will reduce the sales contract chaos.

Basics of Cloud Contract Management

What should you look for in a cloud contract management solution?

  • A library of standard templates from which to work makes it easy for users to access the right one.
  • Automatic routing and alerts help avoid missed deadlines and ensure that everyone has visibility into contact status.
  • Easy CRM and ERP integration without special programming or additional costs.
  • Electronic signature capability, which helps accelerate contract approvals and provides visibility into which contracts are awaiting signatures.
  • Collaboration among prospects, sales, and legal so each party gets access to information that matters

Say ‘No’ to Managing Technology and ‘Yes’ to Managing the Business

If you work for a small or medium-sized company or in a resources-constrained division of a large company, selecting and managing new technology presents a daunting task. Not only are budgets constrained, but today’s economy also makes adding new, on-premise software along with the required hardware and tools to support the software difficult, if not impossible.  

Implementing traditional sales contract automation software involves managing software, hardware and professional services in an expensive, time-consuming process. A cloud software solution, however, means that you manage thebusiness function not the technology. Cloud enables you to solve the business problem and to reap business benefits while leaving the technology challenges to others.

How Do You Know If You Have Solved Contract Chaos?

You know you’ve solved contract chaos when you are closing more deals faster, making forecasts, and reducing the amount of nerve-wracking, last-minute contract reviews and approvals. You’ll also have metrics to track improvements and to identify areas for improvement:

  1. Percent of deals closed on time vs. those that slip into the next period and their root cause.
  2. Reduction in DSO.
  3. Reduction in time taken to negotiate and close contracts.
  4. Number of contracts by status and by individual.
  5. Reduction in regulatory penalties, missed deadlines and lost sales.

Say ‘No’ to Managing Technology and ‘Yes’ to Managing Contracts

In the past, implementing traditional sales contract automation software would have been an expensive, time-consuming, and painfully complex process. You would have to spend countless hours researching different vendors, putting out an RFP, comparing products, building an ROI case, and getting IT budgets assigned as well as working through the purchase and implementation cycle.

A cloud software solution means that you manage thefunction, not the technology. Cloud enables you to get started quickly, sometimes within a few days, and begin to actually use the solution to automate your processes without the capital expense and the time intensity of traditional software. You can solve the business problems and reap the benefits while leaving the technology challenges to others. The cloud model also provides tremendous advantages to quickly and easily transform a chaotic sales contract process into one that cuts time out of the contract process and enhances sales team productivity—while offering fast time to value but low relative risk for the organization.

 

Keith Peterson is senior vice president of sales atSpringCM. He can be reached at kpeterson@springcm.com.