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Externe Verhandlung

E-mail ping-pong: How to solve long contract negotiations

The negotiation phase of any contract can cause major friction and unnecessary delays throughout the contract process.

Unfortunately, many companies still use emails to attach contracts and send them back and forth internally, as well as to work and negotiate with third parties. This is a waste of time for everyone involved, especially the person in charge of the contract process

And if you often have to deal with back-and-forth emails, this number might make sense for you:

In this article, you'll learn:

  • What is a contract negotiation process.
  • Why it is not a good idea to negotiate a contract via email.
  • How contract management software can make the contract negotiation process more efficient.

What Exactly is a Contract Negotiation?

Contract negotiations are a mutually beneficial agreement in which two or more parties must reach a compromise and work out a contract. As part of this process, the parties meet to discuss the ideal terms and conditions. In addition, the negotiation process reduces financial, administrative, and compliance risk for both parties and gives them the opportunity to benefit from it.

Poor contract processes and unclear communication during contract negotiations can result in an exchange of many emails (known as “email ping-pong”). This can delay negotiations and make it difficult to reach an agreement quickly. In the following, we will explain a few tips that could help you avoid the tedious email ping-pong.

How Long Should Your Contract Email Threads Be? (Answer: ZERO)

Why Are Contract Negotiations Via Email So Painful?

Nowadays, in many cases, emails are used as a core tool by organizations in the negotiation and decision-making process. While most negotiators are aware that email can be less effective or frustrating under certain circumstances, they still use it occasionally.

The following are some challenges that make email negotiations inefficient and ineffective.

1. Version control is bizarre

It is tedious to keep track of all changes. If you receive multiple contracts as email attachments, you might not see the latest version of the contract. Without a proper activity feed, you can barely find out who changed what.

2. It is impossible to work effectively with others

The ability to communicate is essential when negotiating contracts. Without real-time collaboration, you can't ensure everyone is on the same page. Teams face logistical challenges when they need to bring together the contributions and feedback of all stakeholders. Discussing conditions in emails may put you at risk. Your negotiating power decreases when you make internal statements that are visible to your interlocutors.

If you overlook difficult and complicated comments about specific clauses, you create uncertainty and delay signing the contract. Another omission is back-and-forth communication via email, which leads to contract data silos.

3. There is no centralized library for contracts

If you use your email as a file storage solution, you'll run into issues such as exceeding storage quotas and deleting important files. How can you ensure that the contracts that have been negotiated correctly are kept, and how can you track down those contracts if you keep exceeding your email storage quotas?

4. Sending an email to the wrong recipient

Who hasn't clicked “send” and then realized that the email was sent to the wrong recipient? Or maybe you clicked “Reply to all” by mistake, even though you only wanted to reply to the sender?

But what happens when “Reply All” forwards a private internal contract negotiation document to the other party to a contract proposal? Or what happens if one of your team members accidentally sends the wrong version of a contract to sign? They can jeopardize the security of sensitive data, drive up the costs of contracting and put you at a competitive disadvantage.

5 Ways to Increase Efficiency in Contract Negotiations With CLM Software

Without ever having to look through your email, there are a few ways contract management software can make collaboration and negotiation easier.

1. Better control over contracts

The best way to manage all of your contracts is to have access to a central database with version control. It's easier to find, review, and approve your documents when you can organize your agreements by status, supplier, contract type, contract manager, or other criteria.

To ensure the accuracy of the final agreement, your team should access the repository appropriately rather than sending emails back and forth. In other words, your contract repository should act as the sole source of truth.

2. View the history of edits and changes

Retaining all previous versions of a contract requires more storage space. Using email to store all those duplicate documents is inefficient.

A contract software with integrated Collaboration and version tracking allows you to centralize your process while maintaining the entire document history. When resources make changes to the document, the system saves all versions and allows you to review any changes made during the negotiation process.

3. Streamlining the drafting of agreements and drafting of contracts

Complex specifications and requirements are often found in contracts. Business and legal teams must interact multiple times to get the language correct during the initial draft. Attempting to handle these interactions via email slows down the process and ultimately affects the accuracy of the document.

During the negotiation and redlining process, you can use contract software to add internal and external resources. All parties involved are informed of necessary updates, as the system records all inputs under the identity of the respective resource and thus helps to manage the expectations and responsibilities of various stakeholders.

4. Improved cross-team collaboration and audit trail maintenance

The top-level collaboration required for current contract negotiations cannot be achieved through email communication alone. This dilemma is usually resolved by contract software. They strengthen your negotiations by enabling real-time collaboration.

Various team members provide feedback during negotiations. Contract software can help you create transparency. You don't have to worry about overlooking requests for changes. You can easily leave notes for yourself, team members, and all contractors, as well as internal and external comments.

5. Insights from previous negotiations

Teams can evaluate and revise their strategies using negotiation-based insights. You can check which contracts require maximum or minimum negotiation effort and then adapt the templates.

You also have an advantage in negotiations, as you have specific information from previously intensively negotiated provisions that will help you negotiate more effectively. They can understand a customer's story and set positions accordingly, which leads to faster contract closing. Gathering information from previous negotiations via email is time-consuming and tedious.

FAQ

How much time should you spend preparing for a negotiation?

If your company drafts and negotiates contracts manually, this process can last a few days or even weeks. When contracts are created manually, teams must spend more time seeking approvals and managing the contract process.

How does time affect the negotiation? Why is time important in negotiations?

The most efficient way to use time is to negotiate with the other person only when you know that they must make a decision and that it must be done quickly. The longer the other party has to wait for a decision, the longer the negotiation process will take. A lengthy negotiation phase will never work in your favor.

Conclusion

Although the negotiation phase of a contract is crucial, little has changed in this area since the invention of email. However, modern tools such as contract management software enable companies to negotiate complex agreements efficiently.

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