Sell-side Contracts and CLM's Transformation Capabilities

Much like buy-side contracts, sell-side contracts are key to revenue maximization in businesses. As the name implies, these legal agreements are used to sell goods and services to external entities. It protects all contracting parties by clearly detailing the engagement’s terms and obligations.  

Sell-side contracts like the Master Service Agreement (MSA) or Service Level Agreement (SLA) ensure fulfilment of outbound commitments and commercial outcomes. Traditionally the mainstay of Sales departments, sell-side contracts are used by other functions as well. This trend is driven by business departments transitioning to the role of a service provider for parties, both external and internal. Such departments often fulfil roles like that of an internal service provider, shared services unit, or external service provider. Today, sell-side contracts are also used by departments like IT, Finance, Human Resources, Logistics, Project Management, and Legal teams. 

Steps in Sell-side Contracting

A sell-side contract can be tricky to navigate due to its direct links with profitability. If these agreements are not aligned with corporate objectives, it can lead to significant revenue leakages and statutory compliance issues.

A typical sell-side contract management process involves the following stages:

1. Proposal creation: Shared with clients at the initial stage, proposals detail the pitched product or service. As the first stage of sell-side contracting, proposals must clearly define scope, objectives, and pricing to avoid contractual setbacks in downstream stages. 

2. Client negotiations: This phase typically involves discussions with the client to close the deal. Typical negotiations revolve around pricing, discounts, contract terms, risks, and conditions. Studies show that the average cycle time for contract signature rose by 13% between 2019 and 2021. Protracted negotiations contribute significantly to these delays.

3. Contract creation: In most sell-side contracts, the initial contract draft is created by the client. Experienced sales personnel decode this draft and suggest amendments that meet the seller’s best interests. This is where the involvement of sell-side contract and legal teams prevents contract value erosion. Properly defined authoring workflows and the use of template libraries also help at this stage.

4. Contract execution: The contract as a finalized legal entity is the first outcome of this stage. It marks the beginning of an enforceable sell-side contract with legal obligations from all parties involved. Obligation management becomes a key element of successful contract execution. Outcomes from hereon are based on contractual obligation monitoring, management, and delivery optimization. 

5. Renewal: Sell-side contracts have two outcomes—renewal or termination. Leading sales teams leverage key contract data, successful outcomes, commercial compliance, and optimal delivery reports for renewal discussions. Contract reviews, renegotiations, and redrafts are part of the renewal process.

Like buy-side agreements, sell-side contract cycle times are related to deal complexity. For instance, research by WCC reveals that the class-leading timeframe for simple contracts from bid to contract is under two weeks. Complex contracts can take months to execute due to multiple friction points between the buyer and seller. 

What are the challenges in managing sell-side contracts? 

A typical enterprise handles thousands of contracts annually. Depending on the industry vertical, sell-side agreements can be a significant part of this portfolio. The Business Services sector is one such example where sell-side contracts take precedence over the buy-side.

Today, organizations involve close to 25% of their staff in contract lifecycle management at some level or the other. In many cases, the increasing interest in contracting efficiency is driven by sell-side revenues. For instance, contracts are significant tangible assets in verticals like IT, Consulting, and Business Services. 

Traditional contract management approaches rely on email-based processes and manual reviews. On the other hand, organizations with older Contract Lifecycle Management (CLM) technology face issues like contract data spread across disparate processes and multiple applications. This often leads to a “file and forget” approach after sell-side contract execution. 

Common sell-side contract management issues include:

• Contracting delays due to information mismatches and misplaced approvals

• Compliance setbacks and higher operational risks

• Insufficient collaboration due to email-based processes

• Lack of contextual information due to multiple data-gathering channels

• Inconsistent contract language resulting from non-standardized terms and clauses

• Limited insights into contract obligations

• Sales, Contract, and Legal teams are unable to retrieve contract data

• Inadequate audit trails and regulatory compliance issues

• Issues on aspects like payment terms, delivery, and warranties 

• Insufficient historical information hampers pitches for similar deals

• Lost upsell and cross sell opportunities

• Lack of CRM integration   

What are the benefits of integrating a sell-side CLM solution?

Management of business uncertainty (like COVID-19’s aftereffects or a turbulent economy) drives the use of new-age CLM technology. Powered by Artificial Intelligence (AI) and Natural Language Processing (NLP), Intelligent CLM tools like SimpliContract extract maximum efficiency and ROI from sell-side contracts—especially for enterprises.

Enterprise CLM solutions deliver end-to-end sell-side contract lifecycle management capabilities like:

• Self-serve contract requests

• Collaborative contract authoring

• Consolidated contract repository

• Real-time access to contractual data

• Detailed reporting

• Comprehensive dashboards

• Alerts about contractual events and milestones

• Obligation extraction from contracts

• Contract compliance monitoring and validation

• Integration with business apps like CRM and ERP

CLM’s strategic transformation for sell-side contracts 

Sales teams can increase revenue velocity, enhance obligation management, and plug revenue leakages with SimpliContract CLM. A case in point is the gains made from CRM integration with CLM. 

Integration of CLM facilitates single click contract requests from the CRM, which reduces bid-to-signature turnaround times. This drives faster adoption of fully compliant contract drafts across the enterprise. It also results in considerable time savings and fewer reviews.

Experienced sales personnel can use wizard-based self-serve authoring capabilities to create fully compliant contracts in no time. Dynamic approvals and collaboration over chats enable faster reviews. 

End-to-end CLM capabilities ensure that sales managers can use a single platform—right from requisitions and execution to renewals. Figure 1: Intelligent CLM capabilities from SimpliContract gives a quick glimpse of the possibilities that new-age CLM tools bring to sell-side contracts.

New-age CLM tools use metadata extraction to renewals and extensions. Sales teams can view this data directly in the CRM. Customizable dashboards provide visibility of contract data like payments and key terms. Advance reminders ensure timely action and prevent revenue losses.

NLP-based extraction of obligations from SOWs is a great enabler for sales teams. Intelligent CLM also adds service level extraction to these post-sale tracking capabilities. Renegotiations are easier for Sales teams due to the higher visibility offered by contract utilization reports. Features like auto redlining and version control ensure seamless amendments. 

Higher revenue realization is possible with Intelligent CLM due to better collaboration across groups. These ensure proper management of obligations and prevent revenue leakages.

Global enterprises rely on continuous contractual process improvements to extract maximum value from their substantial sell-side contract portfolios. In addition to revenue growth, proper administration of sell-side contracts ensures ideal obligations management and customer satisfaction levels. These translate to newer upsell and cross sell opportunities. The use of an intelligent CLM tool is the first step towards unlocking this untapped potential in sell-side contracts.

Are you ready to streamline your end-to-end sell-side contract lifecycle management? Sign up for a free demo to learn more about our Intelligent CLM’s new possibilities for your business.