How To Manage Contract Renewal With Contract Management Software

Whether it is partners, vendors, or clients, renewing beneficial contracts can go a long way in a company’s growth. They enable firms to operate more productively and efficiently without constantly seeking out new alliances.  

But for businesses steering large portfolios, contract renewals can often slip through the cracks. That is why contract managers require a contract renewal strategy to take care of every contractual agreement they handle. Contract management software offers automated functions to streamline the contract renewal process. Read on about the correlation between contract renewal and a company’s operating profit.   

What is contract renewal?  

Contract renewal is the last stage of the contract lifecycle when the initial term of the contractual agreement is about to expire. The parties involved can terminate or renew the legal agreement when it comes to an end. In most cases, the terms of the contractual agreement remain the same after renewal. But the counterparties always have the option of renegotiating the stipulations during the contract renewal process.  

Legal agreements generally come with definite timeframes to dictate the duration of the contract terms. Businesses may choose a date for the contract's automatic renewal if neither side objects to it. It takes a lot of effort for enterprises to manually maintain all the active legal agreements when there are thousands of sales and vendor agreements to manage. Contract management software offers a centralized platform and automated processes to improve contract renewal. Also, better visibility into contract management enables organizations to handle contract renewals efficiently.  

Why do businesses need a contract renewal strategy?  

Contractual agreements lay down the guidelines and expectations of a business relationship. Once the contract gets to the renewal stage, it is time for the invested parties to pause and reflect. They can gauge whether the process and agreement were beneficial for the stakeholders.    

Organizations can either renew the contract or extend its duration. Contract renewal and extension both pertain to maintaining a business partnership. But the enterprises have the opportunity to strengthen their commercial connections and contract management during the contract renewal process. The legal team can add amendments or change clauses according to their priorities and requirements. They can ensure that the company keeps on receiving superior goods & services. The following are some of the benefits of contract renewal procedures that you ought to know: 

• Save time, labor & money 

Contract renewals eliminate the need for the vendor and sales teams to put in countless hours of work to produce results. The company can achieve profit and service without the drawn-out procurement or sales process. Instead, they can devote their time and effort to following new leads and improving returns.   

• Get the most out of contracts  

The contract renewal process is an opportunity for organizations to identify and resolve issues in their previous contractual agreement. Renegotiation can modify any clause or provision that is not working well for the business. Consequently, a company does not have to continue with an unfavorable business situation. There is always scope for amendment and improvement.  

• Improve relationships  

As the contract renewal process helps to reduce costs and improve returns, it is a great way to build high-value relationships. It is a chance for the stakeholders to negotiate payments and performance issues. And at the end of it all, the businesses can produce a near-perfect contractual agreement and business partnerships. Vendors and clients always prefer a business connection with a scope improvement.     

• Enhance legal protection

Contractual agreements must keep up not only with an enterprise's rules but also with governmental laws. During the contract renewal process, the organization can review the contractual provisions and clauses to ensure their legal authenticity and validity. For any legal agreement that does not fall in line with legal obligations, it is open to amendments during the renewal process. As a result, at the end of the renewal stage of the contract lifecycle, organizations will end up with more legally viable agreements.  

How to streamline the contract renewal process with contract management software?   

Contract management software is systematic and efficient for large-scale businesses to handle contracts. Every phase of the contract lifecycle is integral to the competency of a legal agreement. However, the legal team often lacks the time and resources to dedicate to each stage. In addition, it is quite easy for legal staff to lose track of a contract once it is inked. Thankfully, automated contract processes can keep up with tasks that the workforce cannot. Organizations can exploit the following resources offered by contract management software to optimize the contract renewal stage:  

• Single repositories  

Contract management software comes with a secure and cloud-based contract repository. This centralized platform is an easily accessible and searchable location for organizations to store active and inactive contracts. As a result, firms will not pass up contract renewal possibilities because they are hard to locate.   

• Renewal reminders  

Organizations will not be able to commence the contract renewal process at the last minute. The legal time requires time to review the legal agreement and outline ways to improve it. Businesses using spreadsheets and manual processes to keep track of active contracts usually do not have this advantage. Fortunately, the contract management software provides automated reminders for contract renewal and expiry.   

Users can set real-time alerts to get warnings on contract milestones and key dates. Therefore, the legal team has sufficient time to ensure a seamless and profitable contract renewal process. This timely warning can go a long way in helping organizations keep up with their legal obligations. They can also avoid revenue loss and legal liabilities that come with missed deadlines.  

• Automated contract renewal  

All the contracts do not require thorough review and analysis. In such cases, organizations employ automation processes offered by contract management software to take care of contract renewals. Thus, the legal team can forego human error and effort to maximize contract renewals. Therefore, once the time comes, advantageous contractual agreements are automatically renewed without the need for legal division involvement. As a result, they have time to focus on high-value and high-risk jobs. Additionally, automated renewal eliminates unneeded delays or missed opportunities. 

• Contract performance  

Any firm must make the critical decision of whether to renew a contractual arrangement. No one wants to continue a contract that is not profitable and wind up accruing losses. Fortunately, the contract management software simplifies the contract renewal process. They can have facts to back their contract renewal strategies rather than mere intuition.  

The contract management software provides user-friendly tools for organizations to track the performance of legal agreements throughout the contract life. The legal division can exploit contract KPIs (Key Performance Indicators) and contract analytics for actionable insight into the contract value. Thus, businesses can analyze the performance and risk of all contractual agreements before making renewal decisions.  

• Flexible process  

For an effective contract renewal strategy, the legal team must stay on top of all the contract changes and amendments made throughout the contract lifecycle. Contract management software comes with customizable workflows to automate contract creation, negotiation, reviews, approvals, and execution processes. Also, the software clearly defines the responsibilities and accountability in the contract management process. As a result, accurate and up-to-date legal agreements are always accessible to all parties involved. It improves the efficiency of the contract renewal process.  

The contract management software offers real-time document status so that the users can easily track the progress of the contractual agreement through the contract lifecycle. The legal team can identify the terms & clauses that work for the stakeholders and what’s not likely to pass through. It makes the job easier for the organization to initiate renegotiations and renewal processes.  

Conclusion 

The contract renewal stage is an unpassable opportunity for organizations to increase their profits, mitigate risks, and build lasting business connections. A proactive contract renewal strategy can help organizations to achieve greater value from all their contractual agreements. Contract management software offers advanced tools and processes to customize contract renewal processes to suit their needs and challenges.  

The legal team can use customized dashboards, extensive contract reports, and automatic reminders to keep track of renewal and expiration dates. So that the business always has time to evaluate a contract's performance before deciding whether to renew it. Enterprises dealing with hundreds of contracts can adopt contract management software to fast-track contract renewal. Therefore, scaling businesses can ensure that renewal opportunities do not slip through the cracks. Contract renewal also enables the legal team to ascertain the legal validity and compliance of the contractual agreements. With adaptable contract management software, companies can stay on top of the competition. The legal team can improve the renewal procedure and make the most of all contracts.  

Schedule a live demo now to improve your business operation with contract management software.