How to Avoid Year-End Negotiation Chaos – 9 Actions

Part 6 of my series ‘Contract Negotiations: How to Avoid Negotiation Peaks

Introduction – Q4 and Year-End Negotiation Peaks are Real

The most challenging time of the year for teams involved in Commercial Contracting is very close. With 5 weeks to go to Christmas and before focusing fully on end of Q4 deals, there are a number of important actions to take to prioritize the right things to do now. We hope to guide you in the right direction with this article ‘How to Avoid Year-End Negotiation Chaos – 9 Actions’.

Why is the countdown clock to Christmas important for B2B Contract Negotiators?

Ever since I started my career in 2004, I noticed that the end of the year is the busiest time of the year for anyone involved in Contract Negotiations, usually until the Friday before Christmas. Reasons for this are financial, commercial and family/vacation.

After that notorious Friday, it is very difficult to get contracts signed, not only due to holidays of contract negotiators, but especially because people that are authorized to sign contracts are on holidays. I have worked on getting signatures from directors skiing the slopes or sailing their boats, but these are exceptions that should obviously be avoided. It is a risky strategy to bother directors on their holidays…

Which Teams are most affected by the Year-End Negotiation Chaos?

Next to professionals in Finance, Consultancy and Law, teams that struggle most end of Q4 are the Sales, Legal and Procurement Teams. For our series we use Customer and Vendor Contracts as examples as most companies deal with these contracts. In this stage of Q4, with 5 weeks to go to the end of the quarter, it is important to focus on Preparation, Planning & Early Prioritization. How do we do that? By focusing on the following 9 practical steps you should take.

How to Avoid Year-End Negotiation Chaos – 9 Actions listed

Q3 deals

Bring the Q3 deal teams together to focus on closing these Q3 deals now. It is a great strategy to ensure that the last details are finalized now (e.g. data privacy & security, implementation issues, etc.) to avoid them coming up at the last moment end of Q4.

Q1 ’24 Deals

Communicate the priority for Q4 deals to your colleagues that are involved in the Q1 2024 deals. Focus on having your last negotiation meetings for deals closing in Q1 2024 now and after next week postpose further action to the start of 2024.

Vendor Contracts

Focus now on closing any 2023 vendor contracts. Except for vendor contracts that are absolutely critical to close before end of the year, postpone vendor contract that are not closed next week to 2024.

Training the team

Legal should set up the last Sales & Procurement enablement training meetings of 2023. This is a great opportunity to ensure that the teams knows where to find, how to use and explain the Standard Templates. When giving extra negotiation tips, also re-iterate that we should only negotiate contracts above the agreed minimum deal value amount.

Small deals

By the time of writing of this article in mid November, it is now still relatively quiet for Q4. Thus, it is a great time to pay extra attention to smaller deals. Try to close these deals asap so they do not come up at the last moment when all other contracts need to be signed.

Large and Strategic Deals

Discuss and agree with Commercial and Legal Team Leaders what are the biggest & most strategic deals that need to close before the end of the year. Next, divide these deals to the responsible Legal Team members to ensure hat not that one Senior Legal Counsel is stuck with all the biggest deals.

Discuss Process

Discuss process with the teams – internally and externally. What are the most important timelines and steps to take to get the deal closed on time? Next to negotiating the substance (commercial and contractual terms), this is essential to avoid last minute surprises. I have found this to be incredibly helpful in my negotiations, and it is confirmed by one of my favorite negotiation principles of Harvard called ‘Negotiate Process before Substance’. For example in this article of HBR, it is summed up very clearly:

Control the Negotiation Before it Begins.

The more clarity and commitment you have regarding the process, the less likely you are to make mistakes on substance. Negotiating process entails discussing and influencing a range of factors that will affect the outcome of the deal. Ask the other party: How much time does your company need to close the deal? Who must be on board? What factors might slow down or speed up the process? Are there key milestones or dates we should be aware of? Remember to find out simple things such as, Who will be in the meeting tomorrow? What will the agenda be? Since we are not going to discuss the issues of importance to us in the next meeting, when will we address them?

Customer Calls

It is advised to have calls with all Q4 high priority customers you have not spoken to yet. Introduction calls need to be set up now in the last stage of the preparation stage, before the negotiation of the contract will start and will be concluded. This is also part of the previous tip ‘Deal Structure’.

Dormant Deals

As a final tip, I recommend to get in touch with all Contract owners of contracts that have been dormant in the past 3-6 months and inform them that you assume that these deals will be handled again in Q1 2024 as you are starting to get ready for the final weeks of Q4. In this communication you inform them that this is the last week you can still work on these ‘dormant’ deals and that it would not be possible to close them if they would come up again in a few weeks.

Conclusion

Hopefully it was helpful to read our tips in this article ‘How to Avoid Year-End Negotiation Chaos- 9 Actions’. I have used these tips in practice and seen that the End-of-Year Negotiation Chaos and rush was much less when focusing on these 9 points.

If you would like more tips on this subject or if you want us to jump in and help out your team to improve these processes, please contact us at lowa@amstlegal.com or Robby Reggers at +31 6 5060 8964.

For more information about prioritization at work and how to motivate your team to do more than just meeting deadlines, please read the following great article of Harvard Business Review.