If you need to terminate a contract coming up for renewal or if your business client contracts were not renewed then you miss out on renewing or are unable to exit. This can happen in a business where, if there is a lack of focus on contract renewals, its process or if it is not being managed properly.
Alternatively, it could also be due to restructuring going on within the business and you are simply trying to figure out which contract renewal activity is a priority, and which one is next. Before you know it either a key contract does not get renewed properly or you end up paying for services which the business no longer uses to its full potential.
Get Organised With a Single View
Let’s say you have a number of lines of business which you need to support with a couple of hundred contract renewals the first place to start is see if there a tool that can help you produce a report of what’s currently there.
Understand Which Side Contract Renewals Sit On
Where a business is depending on the contract renewals on the sales side for example in a SaaS business.
When You Don’t Have a Single View
If there is no contract management tool in place that can provide an update and your business is not going to implement such a tool in the near future then start collecting a view – it can be as simple as building one in Excel.
There are Hundreds or Thousands of Renewals to Deal With
The large numbers of contract renewals can be overwhelming for some in terms of volume. Going back to the earlier point about a single view this will help you manage the large volume and think of ways in which you are going to deal with this.
Plan for Renewals
What Do the Contract Terms Say?
It is also worth checking out the contract terms to consider the contracts renewal mechanism under termination. If there are longer periods for example, then you want to plan ahead if the business is going to go down a different path than just simply renew. Along with this consider what other options are there.
Where there is an automatic renew clause, this means the contract auto renews. The way this operates goes down to its wordings. Where an automatic contract renewal wording is not there then termination could be planned based on the rest of the termination provision allowing this.
If you want to terminate before the renewal is due make sure can under termination of contract this is usually planned in advance followed by a written letter termination the contract within given periods therefore it’s a non-renewal. Take time to correctly draft the letter terminating contract. The contract termination should make is clear if there are any payments due.
We Don’t Have a Copy of the Contract
The copy of the contract that you want to renew is missing and you only have the last signatory page as a digital copy. This gives you very little to go on and what the business has signed up to. There are a number of steps which can be taken to see if a full copy of the contract can be located.
In the absence of the contract try to find out key commitments that you as a business have signed up to. Then see if there is enough time to exit. If you are looking to renew see if new paperwork can be put in place this will improve your position.
Review of the Email Communications
If you consider any emails for the last or current renewals which may have been worked on. Email chains can help to understand how the points were decided. At times you will want to have the full chain of emails and you may require further clarity as to such decision being reached on a particular item.
Has the Business Budgeted for Contract Renewal?
If you want to do contracts renewal for example I.T. security services, which are about to expire in a week, and you’d run to the finance team to confirm this spend. They then turn around that they are not aware of this and it’s not budgeted. Planning for the contract renewal means that this is a spend which is factored in future budgets to avoid such situations.
Also, you could come unstuck if this renewal is not part of the overall business contract renewal strategy for that year and you have not terminated in time. If you can establish the need and approval early on within the business and it’s likely to continue then the renewal becomes a little easier to deal with.
When Do We Start Talking About Renewals?
The first question that comes to mind is do we have a contract renewals process? If yes, this should tell you the various renewal steps and some time frames in advance. In the absence of a process, you may want to create on or include for example on the sales side in a sales playbook.
The reason for doing this is that the business can demonstrate that the renewals process has been kicked off in time and reminders are sent. Also, that each individual within the business is aware of the process and steps which follow.
Multi-Year Contract Renewals
Where there is a multiyear contract if this is with you customer you want to ensure depending in what’s in the contract either at the time before any exit notice periods kick in or as agreed time frames with the sales and finance leadership.
This very much depends on the contract commitments on a case-by-case basis for each of these. If the short contract has fifteen days for expiry term notice, then if it renews having a thirty days renewal period it is misaligned.
As a business again you many want to agree the periods with stakeholders as to which ones you want to standardise.
Auto-Reminders to Customers for Contract Renewals
Depending on your CRM systems any auto-reminders are something which can be scripted and tested and capture the automated renewal reminder emails.
If you have a contract management system for suppliers, this can also be set up to automate an email reminder to the team as to when a contract is coming up for renewal allowing you time to discuss this within the business.
If the contracts renewal you are working on is planned for it allows you to then to focus on getting internal finance, stakeholder approvals. Then the business case be also be created and presented for final approval near to the time when renewal is due.
What is the Contract Renewal Strategy?
Do you have a business senior leadership objective aligned as part of the renewals strategy? If yes, then see whether this can be aligned to contracts renewals throughout the year. Where there is no strategy in place consider what can be created with the senior leadership buy-in.
How Do Contract Renewals Impact the Business?
Where it is a sales lead organisation, this comes down to revenue. For a software-as-a=service business it can be demonstrated by protecting recurring revenues but also any further revenues which come from any upselling either additional services or increasing an existing service to the next level.
If dealing with suppliers, this may be the outcomes of any strategy commitments agreed e.g. consolidation to a single supplier model. These types of objectives help to drive improvements in the business.
In summary, putting in place a contract renewals process helps to align the business and its individual to a single approach. This assists the business to establish good governance. The value which is being provided is the quicker conclusion or delivery of the contract renewal and measurement of any return of investment such as revenue increase or operational efficiency.Read Our Contract Case Study Read Our Master Contract Case Study Get Your Free Consultation