How often does your Middle Market firm go over each of your contracts? Do you have a process in place for regularly scheduled evaluations of your existing contracts? If you aren’t shaking your head yes at this point, you might want to start thinking about doing so. Why does it matter?
What’s In Your Existing Middle Market Contracts?
If your Middle Market organization has the same contracts with vendors and suppliers as it did on day one, do you truly know what is in the fine print? Or, do the terms fit your current reality and needs? Depending on the length of time you’ve been in business, they may not be accurate or to your benefit any longer. Also, your Middle Market firm may end up being outside the original terms of a contract as you’ve grown and changed. The point is, if you aren’t regularly reviewing and updating your contracts, you don’t know what you don’t know.
Spending a bit of time going through existing contracts with a fine-tooth comb is well worth it.
What Could A Review Do For Your Middle Market Company?
To begin with, you could be paying for services or products you no longer use. Or, you could be paying more than you need to if your usage/needs have changed. Also, you may have had terms that originally were necessary but no longer fit. Next, when you have a very clear idea of what is in your contract, you have more in your negotiation toolkit if you want to work out a new contract. By getting into every detail, you can be very granular in your updated contract requests.
Lastly, if you decide to look for different or replacement vendors, you’ll have a better idea of exactly what you want and don’t want in your next agreement.
Starting The Process Of A Full-Scale Contract Review For Your Middle Market Organization
Obviously, depending on the length of time you’ve been in business, the number of vendor relationships you have and other factors, you may have many contracts to review. They may be extremely lengthy, and it can be a daunting process to start a full-scale review. Instead of becoming overwhelmed, it can be helpful to define exactly what it is you hope to accomplish.
If you are initiating a recurring process of review, your initial desired outcome may be to just get through the process. Or, you could have a focus to save money. Also, you may be wondering if other vendors could provide what you need in a better manner. No matter what it is, just set a goal, so you’ll know when you’ve been successful.
Next, start by developing the process you’ll use to evaluate contracts and defining who will be involved. Does it make sense to have your whole C-Suite involved, for instance? Or, will you pull in key personnel from affected departments? Should your board be involved? Is it time to form an advisory board just specifically for this task? Also, set benchmarks and tracking requirements, so you know you’ve thoroughly reviewed, processed and documented your contracts. Lastly, identify how often your contracts need to come up for review and define special circumstances that would call for an immediate review.
Spending the time to review and evaluate the contracts your Middle Market company has in place can save time, energy and money. Developing and carrying out systematic, periodic reviews is essential.
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