In the world of B2B selling, sales contracts sit at the heart of every sales conversation. After all, these documents summarize the deal, the payment terms, outlines the approach to providing a solution to them, and much more. So when following a lead, sales teams across the world wish to write up the perfect contract so that the overall sales-to-closing cycle is reduced, and the deals get closed sooner.
Sales Contract Checklist
Here are a few terms or clauses in any sales contract that you should keep a close eye on –
Every term in the contract can be negotiated upon, which is why it is crucial to understand the scope and purpose of these terms. See that they align with your business guidelines. Be extra careful around ambiguous terms that can result in a ‘no.’
Rights and Responsibilities
Capture who is responsible for what and be sure to mention that in the contract. While an oral understanding is often the stepping stone in any sales deals, knowing your rights and understanding via an agreement is better in settling disputes. This is often scattered throughout the document, which is why you should read each part carefully.
If either party has access to non-public or personal information or protected health information, confidentiality provisions must be included. These confidential provisions are required to handle and secure information and are consistent with federal and state laws.
Explore Ways to Limit Your Liability
Nobody wants to talk about the bad stuff ever occurring, but such things happen, and to avoid that, it is necessary to put remedial provisions in place. Explore and include all types of remedies that you would need to safeguard yourself.
This remains one of the key negotiation points between the buyer and the seller. Since each party will determine methods to minimize risks and maximize rewards, parties may require common provisions. The availability of insurance requirements needs to be checked.
Via the indemnification clause, you agree to protect the other business from liability or loss that may arise from the transaction. However, it is best to limit the indemnification amount as much as possible. Involve legal teams to understand the unintended consequences that may arise from agreeing to such clauses.
It is important to include termination clauses for cause and convenience (without cause) if the product is not working.
Resolution of Disputes
Including an arbitration clause or even mediation requirement in your contract saves you lots of time and money. But before including an arbitrary clause, understand how you would like to go ahead in resolving disputes.
Identify the key parties involved. Include signature lines. This will refer to individuals who are authorized to sign on behalf of the business. This makes the contract enforceable.
Different Types of Sales Contract Templates
Here are some examples of standard contracts used across industries and some of the substantial differences between them –
General Business Service Contracts
Business contracts usually contain a detailed description that outlines the scope of work and the specified timeframe that informs customers about what they can expect regarding deliverables. Sometimes specific quality criteria are added to define what constitutes a satisfactory outcome for the customer. This contract also includes liability and indemnity clauses.
Freelance Contract to Companies
This contract comparatively has lesser legal terms; this is because the projects are often smaller in scope. Usually, this is included as part of the proposal. The contract should include a description of services, specific timelines, pricing, and payment terms.
Consulting Contract to Companies
The word consulting can cover an array of services, everything from one training session to a long term position on company boards. Therefore, a consulting contract should include terms of engagement, including compensation (fees, travel, and accommodation), confidentiality, intellectual property, and personal liability.
Problems With Traditional Business Contract Review
Reviewing contracts is usually splintered across finance, sales, and legal departments. This leads to missing out on information (like rate increase clause, automatic renewal dates, incentives, rebates, SLAs) and sending across wrong contracts. Furthermore, some store contracts on Sharepoint and others use Google Drive or some other homegrown systems. These standalone repositories are inaccessible, making tracking of relevant agreements more challenging.
This fragmentation in managing contracts results in disconnected workflows and inconsistencies in clauses and terms. Missed obligations lead to lost revenue, unnecessary cost, and unwanted renewals and sometimes cause non-compliance or breach of contract situations that may lead to litigation.
With businesses becoming more agile and complex – it has become increasingly important that companies realize what the mismanagement of contracts will cost them. This is the time to invest in contract management tools.
Swipe Right to Contract Management Tool
The right contract management platform will help you draft, review, share, and sign contracts from the same platform. You can also send instant notifications to review specific clauses. Here are some other benefits of using a contract management solution.
The Benefits Behind Contract Management Tools
- Expedite approvals – A lot of sales contracts require approvals. Most of these contract management tools are equipped with approval workflows that accelerate the review process and increase efficiency. These tools help scan the sales contracts and notify responsible parties via emails or in-app messaging.
- Centralized repository – Online centralized repository eliminates the paper trail and bulky file cabinets. This is a blessing, especially for SMBs who have a limited budget and cannot afford the additional storage space cost. The cloud contract management tool keeps track of all contracts.
- Easier collaboration across teams – Most SMBs don’t have an in-house legal team or consultant. The contract management software enables easy collaboration across teams via notes, comments, and in-app messages.
- Effortless data protection – With Twitter accounts getting hacked; businesses have realized the importance of data security now more than ever. If companies have intellectual property, client data, employee records, or any other type of data of value, it is important to safeguard it. Contract management tools protect this information through encryption and two-factor authentication.
- Electronic signatures – Most contract management tools come with the ability to capture electronic signatures.
- Link sharing of contracts – Waste no time in getting reviews, feedback, approvals or even sign-offs as contracts can be shared digitally and signatures signed electronically, without signing in.
- Reliable search of business documents – Most contract management systems come with secure search options where users can search for key agreements, without needing to go through each contract individually.
- Standardizing contracts with templates – To make contract creators adhere to standard contracting policies can be challenging. However, to maintain contract quality, standardized templates can be used.
(If you are still not convinced, read here to know why modern businesses are investing in IoT driven smart contracts.)
The right contract management tool is secure and provides centralized storage, collaborative plugins, workflows, and e-signature capabilities that improve efficiency. The best part is you’ll have an accurate, real-time picture of your organization’s contracting risks and opportunities. With the right contract management tool, you can boost company-wide efficiency.
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