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Contract Renewal is one of the most common business transaction. It is, in essence, the renewal of two or more entity’s legal relationships to ensure smooth business operations. Contract renewal, first and foremost, must not be confused with a contract extension. This is another common mistake when it comes to the contract management process. Contract renewal is the recreation of a new contract through legal means or the replacement of an existing contract with a new one, with updated terms. On the other hand, a contract extension is a mere act of extending the life of an old contract. Contracts are legally-binding documents that specify the responsibilities of each entity. As such, it is important to ensure that the renewal process goes smoothly and without a hitch.
Here are some of the things to note when you review contract prior to renewing.
Should you change the time frame of the new contract? Would a shorter or longer period be better for the company?
Were the KPIs set in the original contract satisfied? If so, are there additional KPIs that you want to set? If there were problems, should you add sanctions in the contracts if the vendor or client did not deliver?
More often than not, a contract renewal entails a change in price. Clients usually expect a discount from you because of their extended patronage.
Are there new terms that you want to add to the contract? Make sure that you have it approved by the necessary departments before you incorporate it into the new contract.
It would be wise for you to create a checklist before you move to the contract renewal process. The entire process takes a lot of time so it would be practical if nothing happens that would have you go back to the drawing board. Below are the things you must check so your operations end up successful.
It is common for the terms in a contract to change when it is renewed. Terms like pricing, dates, and KPIs will inevitably change. Don’t make the rookie mistake of leaving out certain terms and having to re-do the process again.
Before you push forward with the contract signing, it is crucial that all parties involved be notified of all the changes and additions in the contract. It would be unethical to catch them unaware of the new changes that you made. It can even lead to the falling out of your relationship with your clients and vendors.
It would be best to provide all concerned departments with all the documents that are related to the contract. This would ensure that no miscommunication ever happens or a department getting ignored during the approval process.
Make sure that you ensure that all your recipients have received your message. This is to ensure that everyone is informed and no one is left out of the loop. Having everyone reply to your email with a received notification will usually do the trick.
Make sure that all the contract data is still up to date. The address, contact information, and job positions inside a contract usually change. A mistake in this crucial information may delay the entire process
After the contracts are signed, it is important that you file both the old and the new version of your contracts. This will guarantee that the next person to do the contract renewal will have an easier time as they can easily just follow what you did.
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