Date. 1st May 2024
Companies around the world use contracts to negotiate and lock in business. Yet, many businesses continue to focus on sales process automation without paying enough attention to the importance of their contract processes. As a result, contracts often get bogged down in the last mile of the agreement, when all parties would like nothing more than to get through to the done, signatures inked, and contract finalized.
To understand why contract processes are so important in your business, here is the latest information on what modern contracts are, how they impact your business, and the process to follow to create an industrystandard contract.
Contracts are imperative for building trusting business relationships and streamlining important transactions. Outside of that, there are a few other reasons why contracts are important for your business.
A business contract should clearly outline what each party has agreed to do. All benefits, services, and payments should be in the contract to ensure an unmistakable contract outcome. Concrete details also guard against misunderstandings as both parties have a clear expectation of the transaction.
A written contract that explicitly states each side’s expectations creates legal protection for both parties. You and your company have a clear path of what to do to uphold your end of the contract, as well as what forms a breach of contract.
One clause that can be added to a written contract involves confidentiality. If the business contract involves sensitive information, you can ensure secrecy by adding a confidentiality agreement into your written contract.
Once the contract is written and agreed upon by both parties, both sides should maintain a copy of the agreement to have an official record of the transaction. Both your company and the other business or client can work strictly against the contract and complete all services and payments by the close of the agreement date.
The contract procurement processbegins when your company identifies a need to be fulfilled or is approached by a client for a specific project. The entire process is complete once the contract is awarded and signed, but there are many steps to get from beginning to end.
There are particular goals you should set in your contract procurement process and these steps can be the same every time you search for, or receive a new contract. Since contracts are legally binding, follow these goals for a successful process.
After you’ve decided to move forward in partnership with another business or a client, it’s time to start drafting your contract. Contracts allows you to easily draft, negotiate, approve, store, and analyze every contract your business needs. As an added benefit, all your contracts are stored in a secure,location / online that you can access at any time.
Roughly seventy fivepercent of companies still use manual processes to manage contract work. This often creates situations where paperwork gets lost, negotiations stall, and in worst-case scenarios, the entire process falls apart.
With paper contracts, there’s also the problem of data accuracy, since human errors can happen when retyping form information back into a computer. Manual, paper-based contract processes are expensive, less efficient, and outdated in today’s industry.
By using automatedcontracts, all your information is in one place where it can be easily viewed, updated, and shared in real-time to keep negotiations moving and the contract processes simple and more cost-effective. Whether it’s for services, products, an MSA, or a quote, automated contracts make your business processes more efficient and effective.
A complete, thorough contract process streamlines your business and helps save time and money every time you enter a new contract agreement. With automated contracts, come to every contract negotiation with confidence that you have a strong process in place to get the job done.
If you have a good relationship with your counterparty, you may be comfortable entering into a relationship based on a “gentlemen’s” agreement or a more informal agreement than a written agreement. However, it would be always recommend entering into a written agreement regardless of the strength of your business relationship.
Why we recommend entering into a contract?
The biggest benefit of a written contract, is it if well drafted it provides proof and certainty of what has been agreed between the parties. The terms agreed between the parties should clearly outline each parties’ obligations, rights and duties under the contract as this helps manage each party’s expectations under the contract and minimizes the risk of any disputes or misunderstandings as to what was agreed.
If a written agreement is not in place, then the parties may be left piecing together bits of correspondence or verbal communications as well as legally implied terms to ascertain the terms which govern the relationship. This approach lacks certainty and can result in costly and timeconsuming disputes between parties.
Businesses need to understand what the liabilities and obligations of the business are under any new business arrangement. The best way to do this is to enter into a written contract with the counterparty. It is only then that a business will have a full understanding of the businesses’ exposure and risk under the contract. A written contract also provides you with the opportunity to add in additional protections which might be necessary to balance the risk under the arrangement and which wouldn’t apply if not specified in a written contract.
It is often only when something goes wrong that a party looks to rely on the contract, and without one, the terms of the arrangement can be extremely unclear. We have seen on many occasions that clients do not have a written agreement in place and then if something does go wrong the disputes are usually complicated by the fact that there is no written agreement which in turn may make them more costly and time consuming.
Relying on a “gentlemen’s” or informal agreement to avoid time and costs associated with drawing up a written contract could cost you considerably more in the future if a dispute arises.
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Construction & Project Management
Environmental Science & Natural Resource Management
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