Don’t Forget These 5 Tips on How to Evaluate Renewing Contracts

Are you having trouble managing renewals, and how can they be evaluated to reach their full potential? You’re not alone; the right strategy can make all the difference.

Managing these contract renewals is more than routine tasks; they’re critical opportunities to secure protection and add value to your contracts. However, without a structured strategy, they can lead to unnecessary expenses and missed opportunities for renegotiation.

What is a contract renewal process?

The contract renewal process involves systematic review, assessment, and renegotiating of a contract as it nears its expiration date. This process typically involves analyzing past performance, evaluating costs, ensuring compliance with terms, and determining if changes or adjustments are needed. This process aims to optimize the value of the contract, providing the agreement stays beneficial and applicable to business goals. A structured contract renewal process helps organizations avoid autorenewals and exploit negotiation opportunities.

Why do you need a contract renewal strategy?

Preventing Service Interruptions

A proactive contract renewal strategy offers numerous benefits. First, it helps control service interruptions, providing smooth transitions between contract periods. This supports your contract processes operating seamlessly without disruption.

Align Contracts with Needs

Further, having a clear contract renewal strategy allows you to better align contracts with your changing needs. By renegotiating terms or exploring alternatives, you can ensure better pricing, additional features, and improved support, maximizing the value of your agreements.

Also read: Quick Tips to Evaluate Contract Processes: Requests, Creation, Review

Manage Budget and Expenses

Lastly, a well-executed contract renewal strategy helps you stay on top of budget management, prevent unexpected price hikes, and update service level agreements (SLAs) to reflect current requirements. This foresight can prevent costly surprises and secure ongoing value from your contracts.

A solid contract renewal strategy provides a strong foundation, but automated reminders ensure timely action, helping you stay ahead of deadlines, avoid costly renewals, and maintain control over essential contract terms.

How can automated reminders help ensure proactive contract renewal?

A main selling point of contract management systems is that they send contract managers automated reminders when a contract is due to renew, expire, or needs renegotiating. And this helps you to stay away from the inept contract renewal methods.

• You recognize that letting uneconomical contracts auto-renew is costly, and know that they need review, but what’s the next step?

• What happens once you receive notification that a contract is up for renewal?

• What should you look at, and how does a contract management system expedite the review and renewal process?

That’s why it’s necessary to know how to properly evaluate a contract renewal. An effective evaluation process can help you find hidden costs, reassess terms, and determine if the contract aligns with your current needs. By thoroughly reviewing each element of a contract before renewing, you confirm that your contracts remain profitable and aligned with your organization’s goals, allowing you to negotiate better terms or explore alternatives if necessary.

Here are 5 essential tips for evaluating a contract renewal effectively:

1. Set Advance Auto-Reminders for Thorough Contract Review

First, give your team enough time to review the contract by setting the auto-reminder well in advance of when the contract is due to be renewed. You’ll need time to not only review the contract but also compile additional reports (and/or request information from other departments) and possibly negotiate new terms as well.

2. Evaluate Past Obligations and Performance Consistently

If your contract management system (like ConvergePoint’s software) handles obligation management, look back through the system to see if obligations were met properly and on time. Consider any comments, notes, or discussions that were made here and during mid-contract reviews. Look back at what concerns people had at the time.

3. Review Supporting Documents and Compare Actual Costs

Make sure your system allows for addenda and other supporting documents to travel with the original contract, so you can evaluate all information at once—especially any changes that might have been made while the contract was in effect. Compare the costs agreed upon in the contract to actual costs—were change orders, additions, or revisions made that affected the cost?

4. Use Ad Hoc Reports to Assess Process Efficiency

Your system should also produce ad hoc reports, which should be evaluated as well. Consider how long it took to approve the contract initially and how long the approval, execution, and obligation management processes took.

5. Update Contact Information and Key Dates for Smooth Renewal

Finally, be sure all contact information and dates are up-to-date. People, positions, titles, phone numbers, and addresses can change over the course of a contract’s execution, so make sure your point of contact and his/her information have not changed. That way, if an issue or question arises, you have someone to whom you can reach out and don’t have to scramble or chase down a new contact. When you’ve decided to renew a contract, also make sure to set new dates for obligation and renewal management in your contract management system.

How can ConvergePoint Contract Lifecycle Management Software strengthen your contract renewal strategy?

At ConvergePoint, we combine our turnkey contract management software with a knowledgeable IT team to help contract managers streamline their processes, from contract requests through renewal management. Whether you’re looking for guidance on industry best practices or top-of-the-line support, we’ll tailor our software and advice to your needs.

Centralized Contract Repository

Store all contracts in one secure, accessible place, providing quick retrieval and a clear overview of active contracts. A centralized repository facilitates organization and supports contract visibility across departments.

Effective Agreement Tracking

Track each contract’s status and key milestones with ease. This feature helps you monitor obligations and compliance, ensuring you’re continually up to date on contract performance.

Save Time and Money

Reduce administrative tasks and simplify workflows to avoid costly manual errors. Automated contract processes improve efficiency and allow teams to focus on strategic priorities.

Never Miss a Renewal Date

Stay on top of important dates with automated alerts for renewals, expirations, and renegotiations, preventing missed opportunities and financial damages.

Never Lose a Contract

Ensure every contract is securely stored and accessible. Avoid lost documents or overseen agreements by using powerful and trackable storage that keeps your contracts at your fingertips.

Experience hassle-free renewals with ConvergePoint's contract management software features. Request a demo now!