This blog post was updated on March 14th, 2022. Its original publication date was January 29th, 2019.
Manual contract management processes involving disorganized spreadsheets, sporadic emails, internal billing systems, emailed reminders, and wet signatures may suffice for organizations with low contract volume and contract complexity. Unfortunately, when organizations manage thousands of different contracts of ranging contract types, challenges can arise due to a time-consuming, error-prone, and inefficient manual contract renewal process. Moreover, such an outdated contract renewal strategy can increase risk and decrease opportunity realization. It's time to take control of contract renewals. Read on to learn how to leverage contract renewal process best practices for increased ROI, decreased risk, increased revenue, and better opportunity oversight 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 enter a new contract. Some contracts are scheduled for auto-renewal; however, parties must schedule time for review at least thirty days before a contract renewal becomes active. Automatic renewals can save time, but without a proper contract review process, they can put all counterparties at risk of being locked into a contract that is no longer promoting contract value as expected.
The Importance of Contract Renewal Opportunities
The contract renewals stage allows counterparties the opportunity to address potential issues with the previous contract and renegotiate more favorable terms. Most contracts include renewal provisions, but it's essential to prepare ahead of time by checking for standard clauses and terms that may have been updated since the original contract execution. 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, so contract renewals present the opportunity to improve contracts to meet new standards and support the goals of contract stakeholders. Contract renewal is a chance to renegotiate payment and delivery terms and lower costs, leverage volume discounts, increase performance levels, and address issues with the previous contract. Minor updates can significantly impact the quality, quantity, and efficiency of products and services provided.
Proper contract renewal management should feature a historical review and strategic consideration of the pros and cons of the renewal. Renewal time should be embraced as much more than a lackadaisical check-in - as contract renewals can help increase revenue, reduce costs, ensure obligations are met, improve legal protection, decrease risk exposure, 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 relying on emails, spreadsheets, and decentralized databases and contract repositories can make it challenging to manage large volumes of contracts with ranging complexity, varying renegotiation dates, and myriad renewal terms.
Manual contract renewal processes can deny organizations the capability to quickly address complex contracts or the transparency to see how clauses are positioned across different departments. Manual contract renewals also have the potential to fall through the cracks. The renewals that are addressed will require a significant amount of time and resources for the legal team to review and for finance professionals to confirm contract costs match processed payments.
Additional time will be needed to follow up with anyone and everyone that has ever touched the contract before renewal 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 automation supports business processes with user-friendly contract management tools to maximize contract renewals and get more value out of contracts. Organizations can automate contract renewals to stop inundating their legal teams with document review and - instead - afford them time to focus on providing valuable counsel and risk assessment.
Contract automation can help organizations review contract renewals proactively and quickly to 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. With CobbleStone Software, organizations can identify valuable renewal opportunities, alert stakeholders to proactively review and make decisions, and quickly and seamlessly create new contracts based on existing contracts. CobbleStone Contract Insight is a highly configurable, scalable, low-friction, and user-friendly contract lifecycle management software system that optimizes contract renewals with:
- automated reminders and calendar alerts for effective renewals and obligations oversight.
- a secure and web-enabled contract repository with version tracking to ensure your team can easily search and access the current versions of contracts and agreements as well as 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 organization-wide accountability.
- contract analytics that provide insight into the value and risk of all contract types - uncomplicating renewal decisions.
- proprietary IntelliSign® electronic signatures for faster and more secure sign-offs.
- proprietary 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
Proactive contract review and renewals driven by automation with contract management software help organizations get the most out of contracts. Renewal time is an opportunity to improve your organization with higher profitability, more accurate invoicing, decreased debtor days, more control and visibility, increased productivity, and reduced cost, risk, and liability.
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 flexible and configurable to your organization's process and standards for contract renewals and more. CobbleStone® has been an inventive pioneer in CLM since its inception in the mid-1990s. The various features available with CobbleStone Contract Insight thoroughly equip organizations to manage contracts efficiently (including contract renewals), efficiently manage risk, manage compliance, rapidly draft documents, track costs, receive alerts, sign documents with electronic signatures, and lessen contract management costs due to minimized productivity arising from outdated contract administration.
Learn why thousands of contract managers across the globe trust CobbleStone with their contract management needs, from contract requests to contract renewals. Book your free demo today to learn more about CobbleStone's unparalleled contract software!