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Vertragserstellung auf Basis von Vorlagen

Contract Preparation Guide for Legal and Sales Teams

For many companies, a functioning contract process means more contracts and thus growth in turnover and earnings. However, many companies regularly stumble when trying to set up a functioning contract process. As a result, millions are lost due to lost sales and frictional losses.


What is a contract process?

A functioning contract process is usually understood to mean the process that involves the preparation of legal documents, internal coordination and external negotiation, up to the signing of the document.

Many teams in different departments are often involved in contract processes — although in many cases the legal department has the last word. The process of obtaining input and approval must run smoothly so that contracts can move the business forward and not become a blockage.

With the help of the following tips, we will explain how you can further optimize your contract workflow and prevent contracts from blocking your internal processes.

1. Contract processes should not be improv theatre

Regardless of whether you already have special software for contract automation or whether you continue to rely on traditional battle horses such as Google Docs or Microsoft Excel to manage contracts. For a well-functioning process, it is crucial that there is a clear allocation of responsibilities and a clear distribution of roles. This means that every participant in the process should know what rights he or she is entitled to and what the next step in the process is.

Missing processes, on the other hand, very often result in contracts being abandoned, people taking action and exceeding their competencies in the process. All of this often leads to unnecessary frictional losses.

You should be able to answer the following questions to ensure a smooth process. In italics, we have listed the typical answers from our everyday life for you:

  • Who owns the contract templates? The legal department
  • Who creates contracts from these templates? The sales team
  • Who approves contracts before they are sent out? The sales department and/or the legal department
  • Who negotiates the contracts? Sales for smaller amounts, legal and sales management for higher amounts
  • Who signs contracts and when should the person be involved? Boards/managing directors are often authorized signatories

2. A good contract template is half the battle

A second and important step is to carefully prepare your contract templates. If you want to optimize your contract process for speed, you should prepare your contract templates based on rules. In practice, it is a good idea to color-coded various scenarios, including appropriate explanations, in the templates. Don't forget to enable read-only so your template doesn't get overwritten in the heat of battle.

You should also leave explanations of the various clauses in the document, either using square brackets or footnotes, so that even employees who are not legally trained can draw up contracts.

If you already have access to working software for automating contracts, as well as that from top.legal, then you can also work with embedded placeholders. In addition, free inputs from employees can be stored directly in the contract at the appropriate locations when the contract is drawn up. However, a further adjustment of the contract is generally not possible.

In addition, modern software offers the option of storing alternative clauses for the negotiation situation in the contract. This usually also happens in such a way that the unrequired clauses do not have to be deleted again before further use. Multiple dependencies can also be included in the contract with one click.

3. Explain your submission until the doctor arrives

Once you've prepared your templates enough to capture various scenarios, you should start explaining the template to your internal users or external customers.

Give your contracting party the opportunity to understand the contract directly as you read it. This not only saves the contracting party frustration and irritation, but also saves you from inquiries that often only stop you.

Modern software tools can usually display explanations when creating the contract - this makes the contract options more transparent - and also has the option of offering the external contractor additional information in non-technical language. This often makes it easier for external contracting parties to sign contracts.

Even if you only use conventional word processing programs, you should use the comment function to make it easier for the other party to access the contract.

4. Current templates must be easy to find

Your sales department should always have access to the latest templates. It is important that the templates should always be just a few clicks away. If you make it unnecessarily difficult for sales to find the right templates, then employees will not have to fall back on the most recently used but not necessarily current templates.

5. Set up a clear process for final approval

Trust is good, control is better. A quick way to achieve this in your contract process is to establish a clear approval process. When approving, be as granular as possible without unnecessarily complicating the process.

For example, the specialist department or management should have control over the economic conditions and should also approve them at the end. In return, the legal department should then be responsible for reviewing and approving the legal parameters. This always ensures who is ultimately responsible and important points do not fall under the table.

To ensure that your contract process always works well oiled, you should also inform all parties involved where the contract stands in the process. This allows all people to plan their resources more efficiently and maintain additional capacities for periods of high load.

For this point, however, it is impracticable to keep everyone informed by email all the time. After a few days of email overload, you will experience a blunting of all parties involved, meaning that important contracts are lost.

Simple Kanban systems are better suited for this purpose. Each contract is a tile in a Kanban system. This allows managers and department heads to see how many contracts are currently located at which point in the system. Many CRM systems already offer very good and versatile Kanban systems. Alternatively, you can use the free system as well as Trello or Notion.

A clear advantage of Kanban systems over email-based processes is the absence of a flood of emails and a good overview, which makes planning possible. In addition, you can officially forward contracts to the next person responsible and distribute tasks in the process.

6. Make the contract conclusion as smooth as possible

Many companies continue to rely on the traditional handwritten signature, although this has been around for years but at the latest since the introduction of the EU regulation in July 2014 (eIDAS regulation) is no longer required for every document.

A handwritten signature is a complex procedure and requires not much more time than an electronic signature. The contracts must be printed, signed and then sent by post. If you shorten the process because you want to save yourself the mail and scan the document and then send it by e-mail, then the legally secure handwritten signature becomes an insecure simple electronic signature. The process of printing and signing still makes this abbreviation complex and resource-intensive.

Make things as easy as possible for your customers. Don't wait until the customer changes their mind and seize the moment. Give your customer the option to sign the contract when he or she sees fit. To do this, use the electronic signature on mobile phones or other portable electronic devices.

7. Think beyond the signature

Renewals are generally a post-signature activity and therefore a matter of contract management rather than the contract process. However, all important deadlines are already known before the signature is signed and should therefore be taken into account right away.

Forgetting deadlines or an automatic contract extension clause can have significant consequences. For example, large amounts of money can be lost for your company if the promised services or products are not delivered on time. You should therefore state during the contract process that the deadlines from a signed contract are recorded in a central calendar and remind the department involved in good time to deliver or provide the service sold.

It is also best to note the person responsible for writing down the deadlines in your workflow diagram for your contract process.

If your company already has contract software, reminders of important contract deadlines can usually be automatically taken over by the software. In this way, all parties involved receive an e-mail notification to track important appointments.

8. Work continuously to improve your contract processes

Of course, complications with the contract itself or the other party can also arise in the case of a carefully set up and well-rehearsed contract process. A team may sit on contracts for days without looking at them, or a proposal is being negotiated in the same place over and over again so that the process drags on unnecessarily.

In these or similar cases, you should act quickly and revise the process because you are leaving money on the street. Therefore, pay regular attention to which problems recur over and over again and mitigate them in good time.

Contract automation software can help you with this analysis, but even a simple Kanban board can reveal to you where your contract process consumes a lot of resources. Get to the bottom of this.

9. Take the first steps

With just a few simple changes, often a simple allocation of responsibilities, you will notice significant improvements in your contract cycles.

Follow these tips and you will soon find that you no longer have to wait so long for signatures under your contracts. Even small departments can set up a functioning contract workflow in just a few simple steps. The use of modern software can also further inspire your efforts. If you are looking for support in creating a contract process or optimising your contract process, then feel free to contact us and make an appointment for an initial meeting.

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