Contract Negotiations: How To Avoid Negotiation Peaks? Part 3

𝗩𝗲𝗻𝗱𝗼𝗿 𝗖𝗼𝗻𝘁𝗿𝗮𝗰𝘁𝘀
 
Picture the moment of buying new software, finalizing the lease on that dream workspace or formalizing your agreement with the new accountant via engagement letters. These are not just signatures or digital approvals of external contractual terms, they are important business decisions. Welcome to the world of vendor contracts!
 
Building on our previous discussion how to negotiate your 𝘰𝘸𝘯 𝘤𝘰𝘯𝘵𝘳𝘢𝘤𝘵𝘴 like customer contracts (Part 2), let’s focus now on contract of other parties.
 
𝗦𝘁𝗮𝗿𝘁𝗶𝗻𝗴 𝗽𝗼𝗶𝗻𝘁
One key principle we always advocate for: be cautious and hesitant to approve external template vendor contracts (referred to as Customer Paper) replacing your own template customer contract. Even though it is advised that large companies have their own template vendor contract for their vendors, only approve the use of such templates in exceptional and pre-approved cases. This will not only prevent delays, protect your business interests but also streamlines the negotiation process.
 
𝗠𝗮𝗶𝗻 𝗶𝗻𝘃𝗼𝗹𝘃𝗲𝗱 𝘁𝗲𝗮𝗺𝘀
 
𝟭.  𝗠𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁:
Roles:
· Strategic direction
· Alignment other teams. ´If the Sales Team wants to buy this software tool, let’s involve Procurement, Finance and IT to check the suitability of the tool´.
· Final decision

* Best practice:

– Keep overview of vendors to align with company’s objectives.
– Work on communication between teams, especially for large vendor contracts.
 
𝟮. 𝗣𝗿𝗼𝗰𝘂𝗿𝗲𝗺𝗲𝗻𝘁: Acting as the bridge between your company and the external vendors, having the overview and responsibility for all vendor contracts.
Roles:
· Budget & Pricing; Assess value and benefits of vendor contracts.
· Relationship building and primary vendor point of contact
· Negotiating contracts.
· Contract compliance with company policies/procedures

* Best practice:

– Inform all teams early of anticipated engagements with vendors.
– Keep the management updated with vendor list
– Involve the legal team 𝗲𝗮𝗿𝗹𝘆 (avoid end of quarter requests) to review contracts with clear timelines.

𝟯. 𝗟𝗲𝗴𝗮𝗹.
Roles:
· Review, advice and negotiate contracts
· Streamline process
· For large companies: create vendor templates
· Create questionnaire for all vendors (create with Compliance / Data Security Team)
 
* Best practice:
– Create a vendor questionnaire
– Stay proactive (not reactive) to avoid review of vendor contracts in peak periods
– Improve communication between legal, procurement and other teams to avoid delays and last minute reviews.

Prioritize vendor contracts for Quarter start periods. handling contracts based on $value and potential impact.