When companies think of contract renewals as a routine process they often assume they can leave the practice on autopilot.
Contract renewals should be an opportunity to strengthen your relationship with business partners, and tenants in an effort to refine the contract to meet your evolving business needs.
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Missing these contract renewal windows can be expensive and risky as you may allow a service to auto-renew when you’re not happy with the service or no longer need it.
Your business may be in some danger if you fail to renew a contract that is with a key service provider or supplier, according to Norman Kretzmer, founder and CEO of Contract Understanding.
The point is to always review the terms and conditions of a contract, assess contract performance, and decide whether to renew, renegotiate terminate the contract, or automate contract workflows.
Review terms and conditions
The point is to always understand the terms and conditions of the agreements and ensure compliance with any benefits or obligations that have been contracted for.
Assess contract performance
Ensure you take a critical look at the contract to evaluate whether it has met your requirements.
It’s important to analyze whether the other signatory has lived up to their obligations as agreed in the initial contract.
Kretzmer adds how imperative it is to consider whether the relationship in the contract supports current and future business needs or necessitates a better agreement elsewhere.
“For example, with a property lease, you can evaluate whether the premises will accommodate the growth of your business. For a commercial insurance agreement, you may want to seek some quotes to make sure you’re paying a fair premium.”
Decide whether to renew, renegotiate, or terminate a contract
Knowing the decision to make is crucial. If you’re happy with the contract, keep and renew, however, if you want to modify the existing contract, you will need to negotiate with the other party, to make sure you have a clear idea about what you hope to achieve before entering into the agreement.
Should you wish to cancel the agreement ensure that all timelines stipulated in the contract are there as missing timelines may have unintended consequences.
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