Navigating the intricate world of business contracts can be a daunting task, especially when it comes to managing their renewal. However, for small and medium businesses, ensuring a seamless contract renewal process is vital for maintaining strong partnerships and sustaining operational success.
A recent study found that efficient contract management can improve profitability by up to 9% of annual revenue. This statistic highlights the significant impact that a well-managed contract renewal process can have on a business’s bottom line. Let’s delve into the art of simplifying contract renewals and discover how to make the process hassle-free and effective for businesses of all sizes.
What are contract renewals?
Contract renewals are all about extending or reevaluating an existing contract before it runs its course. These renewals let both parties reconfirm their commitments and, if needed, tweak the terms to stay up to date with changing business dynamics.
The contract renewal date signifies the point at which an existing contract’s terms and obligations are due to be extended, renegotiated, or terminated. Usually, if no action is taken, the contract automatically renews on this date, which lets your business relationship continue without interruptions, allowing for a seamless transition into the next contractual term. But, without reminders, an automatic renewal can also cause you to miss reviewing and updating the terms, which can result in outdated terms or missed opportunities for improvements.
Why SMBs need a solid contract renewal strategy
For small and medium businesses, every penny counts. Having a structured contract renewal strategy is crucial for gaining financial control over your business. We all know how expensive it is when a contract that no longer serves you automatically is renewed, and you’re stuck with it for another year or two…
This is a common struggle within small and medium businesses, where signed contracts usually end up in a private email folder, an excel document or sometimes even stored in a paper cabinet. When you don’t have a clear overview of all your contracts it is hard to keep track of when they will be renewed.
Staying on top of your contracts, with a structured and well-thought-out strategy, will not only prevent you from overlooking renewal dates, but it will also keep your partnerships intact, help you adapt to market changes, help you optimize your budget and streamline your operations.
Let’s break down the process into 6 simple steps that will make your contract renewals a breeze:
6 key steps for implementing a successful contract renewal strategy
1. Early evaluation and planning:
– Don’t wait until the last minute! Start the renewal process well before your contract’s expiration date.
– Evaluate the performance of the current contract, identifying its strengths and areas for improvement.
– Plan for potential negotiation points, considering market trends and your and your partner’s changing needs.
2. Clear communication:
– Communication is key! Foster open communication with the other party, and make sure everyone’s on the same page.
– Look for opportunities to grow together and find common ground during the renewal discussions.
3. Review and revamp you contracts:
– Take a deep dive into your existing contracts, focusing on any outdated or confusing terms.
– Suggest necessary changes to fill any gaps or address any new challenges that have cropped up.
– Ensure that the revised terms reflect the current market dynamics and the evolving needs of both parties.
4. Negotiation and agreement:
– Approach negotiations with a positive mindset, aiming for solutions that work for both sides.
– Be flexible and willing to compromise, but always keep your business relationship goals in sight.
– Reach an agreement that aligns with your long-term goals and values of all the involved stakeholders.
5. Document and follow-up:
– Document all agreed-upon terms and conditions by writing in simple, clear terms that everyone understands to avoid misunderstandings in the future.
– Ensure that all parties involved understand and acknowledge the finalized contract terms.
6. Manage your contracts in a centralized system
– Store all your contracts in one centralized repository.
– Get reminders of upcoming renewal dates so you won’t end up with a contract renewal that you don’t want.
– Make sure all relevant stakeholders can get notified of any changes to the contracts.
– See spend- and revenue potential and committed spend which allows for better financial planning, improved decision-making, and more effective risk management.
Manage contract renewals in Trackado
Contract renewals don’t have to be a headache. By following these 6 steps you’ll create a smooth strategy for contract renewals, where you can navigate the process effectively, build sustainable partnerships and long-term success in an ever-evolving business landscape.
In order to excel at your strategy, you’ll need a centralized system for managing your contracts. That’s where Trackado comes into the picture!
Trackado is specifically designed to meet the needs and wants of SMBs, where you can gather workflows, use e-signing, have a structured storage for all your contracts in a centralized repository and get automatic reminders when your contracts are about to expire. All in one tool to help you get full control of your contracts.
Trackado offers Software-as-a-Service, which means there is no installation, set up or configuration required. All you have to do is choose a pricing plan that suits your needs and get started managing your contracts!
30 days free trial.