If you are in business to make money, which most businesses are, chances are highly likely that you will enter into a contract at some time during your sales process. The difference between highly successful companies and those that struggle is their organization level when entering into a contract. The key to success if approaching each step in the process intelligently.
A contract starts with an offer and acceptance, but in between is the negotiating stage. An employer should choose an employee to fit this role that not only can communicate with others but understands the business needs of the business itself. The negotiator must know what areas that the company is willing to negotiate on and which they aren’t, without appearing cold to the other party. Choosing an employee to negotiate that caves too early will result in contracts that do not favor the employee.
Once there is an offer and an acceptance, the legal team for the company takes over. The role of the legal team is not necessarily to improve the contract for the company, but to protect the company instead. During this step the contract is written and must be worded to avoid language that might put the company at increased legal risk if the contract is challenged. While this is the most time consuming part of the contract management system for the legal team, they must be available to help during the subsequent portions.
Just because there was an offer and an acceptance in the first state of the process, doesn’t mean the negotiating is over. This is where the employee representing the company must be compelling. Minor changes are possible during this stage, but major ones should be avoided whenever possible, as they can delay the final approval of the contract.
After this round of negotiations, the contract will be signed and enforced. Many companies make a major mistake here and file the contract in their archives once it is singed and in the enforcement stage. Instead of doing that, the company should have a filing system where all of their active contracts are easy to locate and refer to. This will allow them not only to address any disputes that arise but use successful contracts as templates for future contracts they enter into using their management system.
A contract typically has an agreement, enforcement and completion during the life of that contract. Your company has invested a lot of time and money in completing this contract, if it was successful, don’t forget the chance to renew a contract. Renewing or extending a contract can save your organization a lot of time and money compared to new contractual negotiations starting the process over again.