How to speed up your contract cycle

The pressure is on the legal department as their workloads rise faster than their budgets. With less time on their side and an increasing strain on cross-department relationships due to lengthy review processes, there isn’t the time or money to work with slow contract cycles. 

Manually drafting a high-volume of low-value contracts is an operational nightmare! Legal in-house teams and functional teams that rely on legal are crying out for a solution that will minimise admin tasks and speed up the contract process. Freeing up legal functions to be more strategic and focus on high-value tasks, reducing the reliance from the operational teams on expensive legal resources for contract creation. 

Measuring financial impact

Poor contracting processes don’t just eat up lots of time; they cause direct loss of revenue too. 

Research from IACCM calculated that companies with poor contracting processes lose, on average, 9.2% of their annual revenue due to contract value leakage related to non-standard contract terms that increase the risk and lead to revenue losses.

What’s 9% of your business annual revenue and can you afford to lose it?

Managing data for customer success

If the COVID-19 pandemic has taught us anything, it’s that cloud-based access to contract data and the ability to analyse large volumes of data nearly instantly is immensely valuable, especially in a crisis. But reams of data doesn’t equal value. If not managed properly, it can add to the complexity and lack of efficiency. Thousands of templates and clauses to select from makes generating a proposal very specialised, especially when considering compliance obligations. 

The good news is that contract management solutions are evolving from operational record-keeping systems used for legal auditing purposes into enterprise-level core systems for addressing business risks, costs and revenue maximisation. 

The management of contract clauses and templates set with an intelligent rules engine enables businesses to respond quickly to market changes and adhere to regulations around the globe, both buy-side and sell-side. This saves time, reduces review cycles and minimises risk on non standard terms. By digitising contracts, you gain access to all customer contracts and enable the use of advanced analytics and AI.

“Where's the contract stored?”

A typical Fortune 1000 company has between 20,000 – 40,000 contracts according to Goldman Sachs. Ensuring they have access to them is a business necessity, but storing this data isn’t the only issue. Spreadsheets, emails and even paper are still being used in this high-value process. Which makes you question, if contracts are the lifeblood of all businesses, why is it 85% of companies are still using manual processes to manage them?   

Is your organisation one of them? 

Being able to store and search for all your contracts in a secure repository could be enough for some businesses and is certainly a good place to start if you’re looking to introduce a digital document transformation. “Where do we store them? Or ‘has this contract expired?’ becomes a thing of the past. Having a starting point could make way for further enhancements based on a strategic contract lifecycle roadmap. 

With smart automation features available in content repositories, your contract management system can create, negotiate and report on inefficiencies as well as extract the intelligence to power your business forward. Being able to report on average turn-around time or deviations from standard contract clauses enables you to provide valuable insights back into the business to help manage cash flow and expected timelines.

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Setting the sales team up for success

As a Sales leader, you will have experienced the impact and frustration of a slow contract cycle and the stress that comes with contract negotiations when key contract details aren’t available in Salesforce and other CRM systems.

But what components of a contract management solution will give you the greatest return on your investment? The following features are essential:

  • A contract repository. A virtual filing cabinet, where every contract is stored digitally. Also enabling all qualified users with access to contract content and terms.
  • Automated tracking of versions. As documents are passed through multiple hands and undergo numerous revisions, all redlines are tracked automatically and stored in your CRM.
  • A clause library. Containing pre-approved legal language and templates for contract creation and negotiations, so that sales teams can move through the entire sales contract cycle themselves.
  • A contract status dashboard. That permits users to quickly locate a contract and gain visibility into contract location and status.

Including these features into your contract software solution empowers your sales team to create, negotiate, and execute contracts, accelerating contract cycles and creating satisfied customers and sales reps. It also enables you the sales leader to maintain control and have visibility over the overall contract process. Mitigating risk and enforcing compliance through the use of templates and content that is pre-approved by your legal team. 

The result – faster contract velocity, improved cash flow and streamlined partner and supplier onboarding – enabling your organisation to adapt and scale. 

CPQ + CLM - the Dynamic Duo

If you already have Configure Price Quote (CPQ) software installed and are reading this thinking, what are the benefits of adding a contract lifecycle management solution (CLM)? The short answer is by integrating CPQ with CLM you will maximise your contract workflow, create efficiencies and unlock increased sales productivity. 

Having a unified quoting and contract process saves the sales rep from duplicating work at the different stages as data is added once and pulled through the process. When you hold everything digitally, not only can you access it anywhere at any time, but the potential for human error reduces. 

What happens when you add Billing to your process optimisation? Supporting the CFO to create operational efficiency

If increasing customer satisfaction scores are a key performance indicator for your organisation or board, integrating CPQ and CLM systems improves the quotation and contract management processes. Syncing this data in one system avoids quotes going out wrong and having to be changed to reflect the latest contract terms. 

And that’s not all – having a continually updated library of templates and clauses is a commercial weapon in contract negotiation. Enterprise data and advanced analytics help you optimise decision-making by creating strategies based on insights from previous negotiation cycles.

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One centralised system for Sales, Legal and the Customer

If your contracts are generated faster, you’re going to be able to collect on them quicker. If they’re accurate, you’re going to have far fewer disputes. Meaning happy customers and an even happier C-Suite. Companies that are connecting the sales cycle to their contract process are not only closing more business faster but at a higher proposal amount. The benefits in summary are:

  • Shorter contract lifecycle times
  • Reduced revenue leakage
  • More deals closed
  • Increased visibility, compliance, security and control
  • Reduced risk
  • Reduced admin costs
  • More time on high-value tasks
  • Greater contract flexibility

When considering introducing a contract process optimisation project consider the impact on the businesses:

  • Top-line revenue
  • Overall costs to produce and execute a contract from a resource perspective
  • The level of business risk with non-compliance

Why not see if you can answer these five questions to begin to build your business case for change:

  1. What is the value of your business contracts?
  2. How many people are involved in generating a contract and agreeing it before sending it to the customer?
  3. Who is involved in this process?
  4. How long does it typically take your business to get new contracts drawn up, agreed and signed?
  5. What are the potential risks in terms of fines or supply chain failure that you need to monitor?

If you’d like help understanding your current process metrics and how they can be dramatically improved, get in touch with a member of the team.

PhiX has decades of experience in the full Software Development Lifecycle, specialising in Quote to Cash transformation and user-centric adoption. Designing, developing and implementing end-to-end processes for organisations to accelerate their Quote to Cash process is what we do. Our CPQ and CLM experts work across multiple industries to offer best-of-breed technology solutions with many quick-start options to get you up and running fast.

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