Contract Management

Never Leave the Acceptance Process Out of Your Payment Terms

Always Define Deliverables and Acceptance Process

Have you ever had a supplier send you an invoice based on a payment schedule and a statement of work, but had no way of knowing if that work was ever completed - or if the deliverables were to the satisfaction of your business unit?

If your statement of work didn’t have clearly defined deliverables or an acceptance process for those deliverables, then the chances are there isn’t much you could about it – except pay the invoice and hope they did a good job.

But it should never be that way with professional services.

Any time you negotiate a statement of work with a professional services provider - whether it’s for a fixed-cost engagement or time and materials - you should always have clearly defined deliverables with milestones, an acceptance process for each deliverable, and payment terms tied to the acceptance of those deliverables.

Negotiating "Limitation of Liability" for Non-Lawyers

How do you negotiate the limitation of liability clause? If your answer is “I pass it on to our legal team” or, even worse, “I thought the all-caps meant it was non-negotiable”, then you’re missing out on the opportunity to get a better deal and avoid excessive risks for your organization.

You don’t need to be a lawyer to take advantage of limitation of liability. You just need to know your way around it - and then get your lawyers’ approval before signing.

How to Negotiate a Cap on Annual Increases

Have you ever had a supplier ask for annual fee increases during negotiations? It's a typical demand from suppliers. And most organizations simply meet them half-way by agreeing to a cap on annual increases.

But in many cases, allowing annual increases is like allowing the supplier to rip you off.

Watch this week's video to learn why annual increases make no sense and how you can use this clause to get better deals in negotiations with suppliers:

Why You Should Avoid Mutual Termination for Convenience

Ever ask a supplier for the right to terminate for convenience, only for them to ask for the same in return? Tit for tat might make sense in most negotiation situations, but when it comes to termination, you could be exposing yourself to unnecessary risk.

I’ve been in procurement for over 20 years. And I have yet to hear a valid reason for agreeing to mutual termination for convenience.

Why? Watch today’s video to find out:

How to Negotiate Complicated Legal Terms

Ever get stuck in a contract negotiation because you had to consult legal? It’s important for procurement professionals to refer to their in-house counsel when the legalities get complicated. After all, they are the ones with law degrees. But having a basic understanding of the common legal terms you'll find in contracts can be a key bargaining chip.

The good news is you don’t need a law degree to be able to understand some of these terms. And when you become the one who knows their way around a contract, you'll become the go-to person at the negotiating table.

That’s why this week we’re kicking off a new video series that will go through some of the more confusing clauses you'll find in many contracts.

If you want the upper hand on your next negotiation, watch this:

5 Reasons to Fix Your Broken Contract Management Process

A common response I get from Procurement folks when I ask about their contract management process is: "Our contract management process is a bit of a mess. Contracts are all over the place. They're hard to find and harder to understand. But fixing that is not really a priority for us right now."

I can understand why closing the gaps in your contract management process might not always make it to the top of your agenda as a Procurement leader. It just doesn't seem like an urgent enough problem.

But here's the thing. There are very real opportunities to capitalize on and risks to avoid by improving your contract management process.

That's why we recently released a video series on 5 such risks and opportunities. Missed it? Catch up below:

Why Poor Contract Management is the Ultimate Productivity Killer (and How to Fix It)

Do you spend time reading through long and complicated contracts, after they've been signed, just to understand what you’ve committed to? Does it take forever to retrieve contracts when it's time for a renewal or negotiation?

Are you, like so many others, managing your renewals using spreadsheets or Smartsheets?

If you nodded yes to any of these questions, you're probably wasting way more time on contract management than you realize.

The good news is it doesn't need to be this painful.

Check out today's video to learn how to get back some of that time you've been spending on manual, tedious contract management processes.

Here's an Almost Guaranteed Way to Generate Cost Savings from Software Licenses

For the past few weeks, we've been talking about how a good contract management process can help generate cost savings from technology agreements. When you have better visibility into your technology agreements, you're less likely to fail an audit or get hit with a software compliance penalty. And when renewal time comes around, you'll be able to negotiate with suppliers from a position of strength.

All of this results in cost savings.

But there's one specific area that can generate almost guaranteed and immediate cost savings — mainframe software licenses.

Technology vendors who supply mainframes like to scare clients into believing they're the only ones smart enough to manage the software licenses.

Not in my experience. We once helped a client save $1 million annually in management fees they were paying a mainframe data centre supplier.

Watch this video for the whole story...

How to Avoid Overpaying for Software

Do you often renew software agreements without reviewing the contract terms?

It’s a common practice in the industry. When a software renewal comes across your desk, you sign it and pay the invoice because it’s an established vendor with a long history with the company.

Not to mention that extra step of checking the contract and reviewing your usage can often take days or weeks. By then the invoice would be overdue.

So you pay it in good faith.

But are you sure you're using all the licenses you're paying for? Do you know if you're using the software at all? And are you paying the right amount for it?

We once recovered $60,000 in overpaid fees from a supplier who was increasing fees beyond the negotiated amount for years. And that's just the tip of the iceberg.

In today’s video, we’ll look at how a streamlined contract management process can give you more visibility into your contracts at renewal time.

How to Protect Yourself from Software Compliance Penalties

Are you out of compliance on your software licenses?

Can you say with confidence that none of your software is over-deployed?

If questioned by a vendor, can you prove that you're not out of compliance by referencing the terms of your contract (without taking weeks to investigate)?

I'm not trying to scare you. But I am trying to warn you.

The truth is, software companies rake in millions every year in compliance penalties from unsuspecting companies just like yours.

I’ve seen companies get hit with crippling compliance penalties often for the slightest of technicalities — which makes it so much more frustrating.

What's worse is that software companies will often come after you whether or not you can afford to pay the penalty.

That's exactly what happened to this small startup in Hoboken, New Jersey. Check out the whole story in this week's video: