Manual renewal methods with spreadsheets, emails, emailed reminders, and wet signatures may suffice for organizations with low contract volume and complexity.
Unfortunately, organizations managing thousands of contracts of ranging types can face challenges. Moreover, such an outdated contract renewal strategy can increase the risk that a contract expires with a desired renewal having been overlooked. It's time to take control of how you manage contract renewals. Read on to learn how to leverage contract renewal process best practices with contract management software.
What is Contract Renewal?
Contract renewal is the stage in the contract lifecycle when a contract is scheduled to expire. Counterparties can renew based on current contract terms or renegotiate and create a contract from new. Most contracts are scheduled to be automatically renewed. However, parties must schedule time for contract review at least thirty days before a renewal becomes active.
The Importance of Contract Renewal Opportunities
Renewals allow counterparties the opportunity to address potential issues with the previous contract and renegotiate more favorable terms of the contract. Most existing contracts include renewal clauses. However, it's essential to check for standard clauses and terms that may have been updated since the original contract.
Teams should also confirm that products and services provided through the contract are still necessary. They should review price terms and goal alignment to address these areas during contract renewal.
Organizational strategies, needs, products, services, and budgets evolve. Therefore, contract renewals present the opportunity to improve with new standards and support the goals of stakeholders.
Contract renewal is a chance to renegotiate payment and delivery terms, leverage volume discounts, and increase performance levels. Meanwhile, issues with the previous contract can be addressed. Minor updates can significantly impact the quality, quantity, and efficiency of products and services provided.
Proper contract renewal management should feature a historical review process and strategic consideration of the pros and cons of the renewal. Renewal time should be embraced as much more than a relaxed check-in. It can help increase revenue, reduce costs, decrease risk, and build higher-value relationships.
The Pitfalls of a Manual Contract Renewal Process
Organizations must have a solid process to achieve scalable success with contract renewals. Manual processes rely on emails, spreadsheets, and decentralized contract databases. These methods can complicate managing large volumes of contracts with ranging complexity, renewal dates, and renewal terms.
Manual contract renewal processes can prevent teams from quickly addressing complex contracts to see how clauses are positioned across different departments. Manual contract renewals also have the potential to fall through the cracks. Renewals will require significant time and resources for the legal team to review. Additionally, finance professionals must confirm contract costs match processed payments.
Additional time will be needed to make sure the language and numbers are updated in time. The margin of error, missed opportunity, and loss of productivity is escalated with manual contract renewals...
...but organizations no longer need to waste time on manual contract renewals. There is a straightforward solution to drastically streamline and improve processes today.
Embracing Contract Renewal Automation
Contract renewals don't need to be an arduous, risky, and error-prone process. Instead, organizations can make the most of renewal processes with contract automation.
Contract renewal automation supports business processes with user-friendly contract management tools to get more value out of contracts. Organizations can use auto-renewing to save time for legal teams to provide valuable counsel and risk assessment.
Contract automation can help organizations maximize the volume of contract renewals completed on time with favorable contract negotiations and reduced risk.
CobbleStone Software's award-winning contract management software suite - CobbleStone Contract Insight® - can help organizations realize contract renewal opportunities. Whether you are managing contract extensions, contracts terminating, contract review processes, automatic contract renewal dates, or virtually any other part of contract lifecycle management, CobbleStone® is a highly configurable, scalable, low-friction, and user-friendly contract lifecycle management software system that optimizes renewals with:
- automated reminders and calendar alerts that serve as habitual notice periods for effective renewals and obligations dates oversight.
- a secure contract repository with version tracking to ensure your team can search and access up-to-date contract data.
- audit trails to track renewal status and every change made throughout the life of the contract.
- intelligent contract management workflows to automate tasks and facilitate fast negotiation, reviews and approvals, and signing while promoting accountability.
- contract analytics that provide insight into the value and risk of all contract types - simplifying renewal decisions.
- IntelliSign® electronic signatures for faster and more secure sign-offs.
- VISDOM® artificial intelligence tools for risk analysis, risk mitigation, and proactive risk management.
- seamless integration with various accounting systems, CRMs, ERPs, and more.
Get Started with CobbleStone Software Contract Renewal Automation
Don't let another contract renewal opportunity slip away. Strive to master contract renewals with a strategy supported by contract lifecycle management software. Trust the solution that supports the aforementioned process-defining tools and more: CobbleStone Contract Insight®.
CobbleStone Contract Insight is configurable to your organization's contract management processes and standards for renewals and more.
Learn why thousands of contract managers across the globe trust CobbleStone with their renewal contract management needs. Book your free demo today to learn more about CobbleStone's unparalleled contract software!
*Legal Disclaimer: This article is not legal advice. The content of this article is for educational purposes only. The information on this website may not present the most up-to-date legal information. Readers should contact their attorneys for legal advice regarding any particular legal matter.
This blog post was updated on September 7th, 2023. Its original publication date was January 29th, 2019.