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The thing is, contracts won’t suddenly cost less because you will it so. You might be thinking that since your business is enterprise-oriented, you negotiate too many contracts to simplify your process and save you money. But the truth is, most of the time is spent on negotiating, reviewing, and approving contracts. And this costs a lot because of the time it takes to create it, read it, and pay legal professionals to review it.
This is the case whether or not you are presenting a standard agreement or one that is regularly and often redlined. But standardizing and presenting your contracts in a particular way can decrease the likelihood of redlining and therefore the time to sign.
Standardized contracts are agreements that are common across your business, whose terms are unlikely to change regardless of who is signing/accepting it. Terms of Service, Non-Disclosure Agreements, and certain MSAs, for example, are standard contracts. Standardized contracts typically hold the market terms (terms that are common among other businesses within your industry or vertical) and it is in the best interest of the company to maintain them as is.
On the other hand, personalized contracts are agreements that have specific signers and are provisioned depending on the transaction and the signer. M&A contracts are examples of personalized contracts.
Related: Why Are Contracts So Expensive?
In order to simplify your contracts and bring down their overall costs, standardize your standard agreements. Not only is it more legally compliant to ensure consistency in your terms across the business, it also helps you have a baseline for what you are willing to negotiate and what you aren’t.
It also helps ensure that you are not losing money by having different provisions in the same agreement going to different parties, and Legal won’t have a headache trying to fix the contract. Standardizing your agreements can help you future proof your contracts.
To create standards for the contracts in your business, you should spend time with your agreements and create one master agreement. You should also probably highlight the terms that you may be willing to negotiate (for internal purposes only).
When your contracts are standard, you can have conversations revolving around negotiations one time, and further upstream. This puts you at a strategic advantage in a market where speed and availability can be huge differentiators throughout the buying process.
One little known detail about contract presentation is that the way you present it determines how signers will interact with it. This goes even beyond signing it on a piece of paper vs on a computer screen.
In fact, sending out a Word-based or PDF contract indicates to the signer that there is room for negotiation in your agreement. When enterprises sell to SMBs, contract presentation matters - if they present an agreement via click to accept, clickwrap, or some other digitally-native agreement with no option to redline, SMBs often just accept terms as-is. However, if you send over a word doc or traditional PDF, they're going to think negotiations are open.
Negotiation = time wasted = less money.
The acceptance mindset is all about eliminating manual work that goes into standard agreement generation, facilitating a frictionless one step acceptance process, enabling acceptance at a high volume, and automating the tracking/audit process for all accepted contracts.
The Signing Mindset is the more traditional, heavily negotiated, high touch way of getting agreements signed. This has a place within every organization: there are simply some agreements that will never be no touch, high volume in nature. These agreement types can benefit from more efficient signing/sending akin to what legacy solutions and CLM can provide, but will never be fully automated or seamlessly accepted with just one click.
This isn't just about making the manual work of a Signing experience a little more efficient and user friendly. It is about recognizing the dollar value of that manual work and being strategic about when it is required.
To learn more about the direct correlation between contracts and revenue, download our eBook, Making Contracts the Key to Unlocking Revenue Recovery.