5 Best Negotiation Strategies For Contract Renewal
Companies go through different challenging or beneficial contracts in their business. But, some contracts are so profitable that they are worth renewal. However, working on their renewal can get tricky as some companies lose it during the process.
Practicing the right negotiation strategies while renewing your profitable contract is essential. Contract renewal software usage makes the process faster, convenient and increases its succession rate.
In this article, you will learn the top 5 negotiation strategies for contract renewal as well as how contract renewal software usage can make you successful.
So, let’s get into negotiation strategies!
What is Contract Renewal?
Contract renewals are the restarting of current contracts that have come to an end. A company renews the terms when it gets a significant bonus from an existing partnership with a business or foresees potential profits down the road. For this purpose, they either renew the contract on previous terms or negotiate them for a collaborative approach.
What is the Difference Between Contract Renewal & Extension?
People often misunderstand the renewal of a contract with its extension, but both are somewhat overlapping yet different terms. The contract extension increases the partnership duration of a project between two companies. They set new deadlines or milestones with the same terms and conditions for the current project.
On the other hand, contract renewal is the starting of a new contract on probably different terms with the same company. This term overlaps with contract extension because a business can renew the contract on the same terms, which is somehow similar.
How to Negotiate a Contract Renewal?
Since you know you can renew a project with different terms, the next vital point is how to negotiate a contract renewal that ends successfully. It is a crucial point for a business as the process helps it to keep the profit coming for a particular company. However, failing in negotiation can result in the complete withdrawal of the contract.
According to the statistics, the Best-in-Class businesses renew 56% of their contracts annually, while others do only 25%. It signals if you find the right project, it is essential to keep renewing it for profit. Here are the top 5 negotiation strategies for contract renewal:
5 Best Negotiation Strategies for Contract Renewal
1. Extract Further Value from Current Contracts
When a contract is profiting you in a department, it can provide you even more if you evaluate the terms well. So, before the renewal of the contract, work on different practices to extract further value from your current contract. You can use contract renewal software for this purpose.
Use the software to centralize all your contract dates. It will help you provide a transparent result to the negotiating company that you have not missed any deadline.
You can even extract more value from the contract by reviewing the conditions earlier and doing your homework. The practice will help you to negotiate from a stronger position as you will be familiar with the peaks and dips of the contract. So you can prepare your renewal proposal containing the most valuable terms for your company.
2. Don’t Put Off Contract Review Until it’s Time to Renew
Don’t wait till the last minute to review and analyze terms & conditions while negotiating a contract renewal. It is a mistake many companies make; eventually, they are loaded with reviewal work.
If your team has time to review a contract, do it. The only practice will help you further evaluate your contract as your team will calmly analyze the terms and create negotiation deals. It will lower last-minute stress, which often increases the chances of mistakes.
3. Create a Library of Preferred Terms & Templates
Another great contract renewal strategy is to create a library or portfolio of preferred terms and templates. Indeed the current or previous contracts will have some beneficial aspects due to which you are going for the renewal of the contract.
So, list those profitable terms and use them to negotiate new conditions. It is advised to store those terms online on a cloud server instead of storing them as hard copies as paperwork usually:
● Make the task lengthy and complicated
● Can be misleading or lost
● May take up a lot of space in your office
4. Never Miss Deadlines
One of the most effective negotiation strategies for contract renewal is never missing your previous deadlines. It weakens your position and damages the trust between your partner. You can use automated AI tools or software to remind your team members of an approaching deadline.
The practice is helpful when negotiating a contract renewal; the other party can not accuse you of missing a deadline and make you compromise on some of your terms.
5. Leverage Contract Renewal Software Data for Informed Negotiations
Using contract renewal software is also one of the best practices for successful negotiations. The tool helps you in many ways to create a strong negotiation deal. First, it allows you to craft your proposals on the data, which makes them more accurate and agreeable.
Next, these tools remind you of the expiration date 60 – 90 days earlier, which can help you to review the contract terms and prepare your deal accordingly. The software can also point out any mistake from the other company, such as making a late payment, not signing the invoice, or any of their errors.
How can Contract Renewal Software Help?
Contract renewal software is an absolute lifesaver when working on your negotiation strategies. As stated earlier, it helps you to extract primary terms that can further evaluate your contract. The fact that you use the previous data minimizes mistakes or incorrect information chances.
The software alerts you when a deadline is approaching so your team gets a chance to review it and prepare the proposal. Most significantly, you can handpick the preferred terms from your previous contracts and use them to further increase the rates or demand flexible terms in the contract.
Renewing a profitable contract is beneficial but working on negotiation strategies for contract renewal is tricky. Some companies make mistakes, and their partners part ways.
Using contract renewal software is an effective option because it helps you prepare your data on facts for a stronger proposal. You hardly miss deadlines due to its reminders, and it allows you to review your current contract for better terms.