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May 31, 2022

The renewal period is the most critical stage in the lifecycle of a contract. This is the perfect time to assess the value of the existing arrangement and then renegotiate or end it. But what if your contract renewal process is less than ideal? Contracts can expire without you noticing, and this can lead to potential losses for your business. Implementing contract renewal process best practices can prevent contract renewals from slipping by.

Contract Renewal Process Best Practices

Below, we outline three contract renewal process best practices to get the best value from them.

It’s easy to let contract renewal dates go by, but doing so can end up costing you money.

You could end up spending too much money on vendors that are charging too much, or you could lose your primary vendor if a contract expires and you don’t realize it.

Having effective and streamlined processes for renewing contracts can help your business to avoid any potential pitfalls.

On top of these potential scenarios, there is one loss that is the most frustrating and potentially damaging. That’s the loss of a strong negotiating position.

If a company auto-renewed your contract, they may not have notified you of any changes. If you’ve noticed a change in your pricing or a new service, they may have been unable to contact you.

1. Record All Contract Dates in a Central Database

It’s important to extract and record the key dates and milestones of a contract into a central, dedicated database.

The renewal date is the date by which you need to decide whether or not to extend the period of a contract. It should not be confused with the ‘valid until’ or ‘expiry date’.

If the contract doesn’t explicitly state the renewal date, look for the notice period or ‘valid until’ dates. Once you’ve located these, you can work out the ‘end’ date of your agreement.

If you store your contract renewal dates centrally, everyone who needs to be aware of them will know when they’re coming up. This reduces the chances of anyone forgetting and letting the date pass unnoticed.

Centralizing your lead management processes can be as easy as an Excel spreadsheet, but preferably should be cloud-based.

2. Review Your Contracts Before They Are Up For Renewal

Nobody wants to be put on the spot, and being forced to decide on a contract renewal can have serious repercussions.

When reviewing your supplier agreements, it’s important to consider all of the available data, including those who are directly involved in your dealings with the supplier. This will help you make the best decisions for your company.

Before signing any agreements, you should carefully assess the value of the agreement, as well as whether there are any more cost-effective options available. You should also consider the quality of the relationship, the service level, and any past disputes.

To accurately assess your contracts, you’ll need time. You can’t get this information in just one day, so setting a date for contract renewals isn’t the only thing you should be thinking about.

It’s important to regularly check your contract. This will allow you to carefully assess all the key terms and spot any potential issues.

The amount of time you should spend looking over your contract depends on a variety of factors. These include things like your industry, the time of the year, and your workload. The value or importance of the contract is also something to consider.

To make sure this schedule is as effective as possible, be sure to give yourself reminder alerts. After all, creating schedules is pointless if you don’t follow them!

If your business is more mature, you may have different processes for setting reminders. For example, if you use Excel spreadsheets, you can set a calendar reminder to prompt action.

If you’re tired of manually managing your contracts and are looking for a better way, contract management software could be the solution. With software, you can eliminate manual work and automatically remind clients of upcoming deadlines.

This can be done by setting up pre-designed workflows that trigger at key dates or milestones.

3. Negotiate from the Strongest Position

Before you can truly understand the value of your contracts and how your supplier compares to others, you’ll first need to complete step two.

If you don’t have enough information, you may not be able to make an informed decision about renewing your contract.

If you don’t complete a proper review, you run the risk of paying more than you need to. You also miss out on the opportunity to renegotiate your contract.

Being well informed about your contact and the current market will give you the power to confidently negotiate from a place of knowledge.

You can always try to renegotiate your contract, to better align your suppliers’ incentives with yours.

You may be able to find a better deal elsewhere by doing your research. This could mean that you could end your current agreement.

If you want to get the most out of your agreements, it’s always best to negotiate from a strong position. This way, you can stay one step ahead and get the best possible terms.

Best Practices for Renewal and Upsell Contracts

There are three main types of contracts: new, renewal, and upsells. If you’re a business that operates on a contract, all of your customers will fall into one of the three.

New contracts are easy. It’s when you sign a contract with new clients for whatever service(s) they select.

A renewal contract is a previously-established contract that has reached its original end date.

Signing a contract to hire someone for yard work, such as mowing, is a one-time deal. However, if you agree to have the same person come back the next year, that’s considered a renewal.

When working to renew a contract, it is important to keep the current clientele happy. This can be done by maintaining relationships with clients and reminding them of why they chose your business in the first place. Keeping customers satisfied will provide your organization with security and stability.

Your customers are the backbone of your organization. They provide security and stability to your company.

An upsell contract is when you offer your client more services, or upgrades, to their existing agreement. This is ideal because you’re able to negotiate from a place of strength and provide more value to your clients.

When it’s time to renew your lawnmowing contract, consider upgrading your package to include landscape maintenance services.

When you upsell, you can keep your current customers and get more money out of them. This additional money comes from your existing customers, so you don’t need to spend time finding new people.

Upselling is a great way to increase revenue because it only requires 28% of the cost of acquiring new clients.

Conclusion

When it comes to renewing your contract, the best thing you can do is follow contract renewal process best practices. Do your research ahead of time so that you know what you’re worth, and don’t be afraid to walk away if the offer isn’t good enough. By following these simple tips, you’ll put yourself in a much stronger position to negotiate the best possible deal for yourself.

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