The rate of contract renewals is dropping—fast. Gartner predicts that by 2025, 60% of finance and accounting outsourcing contracts will not be renewed. Why? “Outdated pricing models that do not drive digitization and process improvement,” Gartner Inc reports. Take into consideration that the finance and accounting industry are leaders of the world’s economy (financing alone accounts for 25% of the global economy), and it’s safe to say the trends we see here will likely carry into the rest of the business sector.
What this means is that contract renewal is going to take new creativity, effort, and investment.
If you're one of the millions of businesses who rely on the use of contracts, this is the final of three articles that will help you get ahead of the game when it comes to contract workflows. Check out the first two articles of this series, here:
What is a contract renewal workflow?
Contract renewal workflows are one of the most powerful tools you can use to help ensure your contracts are renewed year after year.
When you set up a contract renewal workflow for a contract, you create an automated process that will handle moving the contract through its renewal process from start to finish. You also designate who will be responsible for each part of the contract, as well as when and how they will receive notifications about their upcoming tasks.
The result?
Contracts get renewed on time, every time—without any manual effort on your end, or any chance of missed details and lost deals.
Why a contract renewal workflow matters
Contracts are the lifeblood of a business. You need them to maintain consistent relationships with your clients, vendors, and partners. But when you have hundreds or thousands of contracts in your database, it's easy for one to slip through the cracks.
What's worse, a missed contract renewal could mean a huge hit to annual revenue, or even worse, legal penalties. It's important to stay on top of all your contracts and renewals in order to avoid any costly mistakes.
A huge value to contract renewal workflows is that it shows you upcoming expirations before they happen. This way, you have time to renegotiate terms or re-enter the negotiation phase before your existing contract lapses, ensuring a successful partnership.
What makes a contract renewal workflow unique?
Contract renewal workflows are similar to contract approval and negotiation workflows. What makes them unique is in the name: renewals. All contracts in existence have a termination date, and if you don't want your business to miss the opportunity to re-sign and renew yours, you must have a workflow to stay on top of them.
Contract renewal time can also be a great opportunity to:
-
Make sure your customer is still satisfied with your product/service.
-
Identify customers at risk of churning.
-
Upsell/cross-sell new products and features.
How to create contract renewals
Imagine you're up against a deadline.
It's time to renew a contract with one of your most important customers and you need to get the terms just right.
You need to ensure that you have all the information and signatures you need, in the right order, by the right time.
But how do you make sure that everything goes smoothly?
That's where a contract renewal workflow comes in.
Contract renewal management is traditionally a manual and unsystematic process, making it difficult to track the status of contract renewals. The process is typically completed through email, spreadsheets and other disjointed tools. This makes it hard to stay on top of important contract details and deadlines, leading to missed opportunities or even costly overpayments.
How to set up / optimize your contract renewal workflow
To avoid this, many companies are turning to contract automation software to streamline their contract renewal process. Contract automation helps organizations review contract renewals proactively and quickly to maximize the volume of contract renewals completed on time.
For most companies, renewal workflows are far too complex to manage in a spreadsheet. That's why Proposify built out-of-the-box, configurable contract renewal workflows into our product. With Proposify’s workflow tool, you can:
-
Easily set up stages for initial outreach, client feedback, and internal review.
-
Create renewal proposals right in the workflow tool, then assign them to clients for added feedback and eSignatures.
-
Configure your stages in a number of different ways with deadlines, reminders, and other custom details so they're completely tailored to your sales process.
-
Customize your workflow reporting in the dashboard to track your team's performance and identify any bottlenecks or areas of improvement.
Pro Tip: Make it easy on yourself and start by using Proposify’s contract template library
Why automate the contract renewal process?
Processing renewals for a large company is no easy task—there are likely dozens or even hundreds of different types of contracts that need to be addressed at regular intervals. If you're managing those renewals manually, you're likely spending more time than necessary on busywork like emailing documents back and forth and making phone calls.
With an automated contract renewal process, you don't have to worry about missing deadlines or being late with paperwork. Instead, you can use a workflow tool to set up prompts to alert your team when a contract needs attention or is ready for renewal. Everything is tracked in one location, and notifications are planned out in advance. This prevents the likelihood of manual mistakes or delays due to human error. To top it all off—once the workflow is set up, you can do all this without lifting a finger yourself!
How to avoid common pitfalls / best practices for your contract renewal workflow
Contract renewal workflows are defined by their ability to automate time-consuming tasks and reduce time spent on follow-up with customers. While this sounds great in theory, there are some downsides you must be aware of:
-
It's a lot of work up front
-
You may miss opportunities to provide individualized attention
-
Mistakes can be amplified
A contract renewal workflow automation takes time and effort to build and implement. Like all process improvements, it’s an investment of time and resources that should be evaluated. Many businesses decide in the end the up-front work is justified by the benefit it brings to the business. “Short-term pain for long-term gain,” as they say; automating contract renewal workflow takes a lot of work upfront, but will save time over the long haul.
Something else to consider is personal customization; some clients are fine with automated emails and follow ups, some may feel slighted when they don't receive a handwritten letter the following year or a call from a trusted advisor when it's time to renew. It’s up to you to know which clients may need more personal care, particularly for larger contract relationships that should be nurtured in person—not by an automated email.
And finally, you'll need to be extra, extra cautious about not making a mistake in your automations. A typo here or a broken link there might not be a big deal to one client, but if that automatically happens and gets sent to every client —you'll have a lot of ground to make up.
Conclusion
Protecting your income stream is an important part of every freelancer's day-to-day operations. A contract renewal workflow is an excellent strategy for making sure that you get paid as often as possible, without putting too much of your time and focus on renewals. There are some pitfalls to watch out for, but if you use common sense and keep a sharp eye on your contracts' status at all times, your workflow will be running smoothly in no time at all.
