Vendor agreements are a key part of the buyer/vendor relationship. How can automation make them easier to manage?
Vendor agreements are some of the most commonly agreed contracts in a business – yet storing and managing these contracts post-signature remains a huge challenge. This deep dive explores why managing vendor agreements can be painful, the benefits of automating them, and more. Use the navigation below to find out more, or explore our other contract deep dives on our specialist blog, Superpowered contracts.
What’s a vendor agreement?
Often referred to as ‘supply of services agreements’ or ‘supplier agreements’, a vendor agreement defines how companies buy goods and services. Whether you’re a food marketplace looking to buy produce or a tech business purchasing new software, the contract that sets out the terms and conditions of the purchase will likely be a vendor agreement.
Sent by the counterparty, the vendor agreement is an important touchpoint between buyer and supplier. For the supplier or vendor, the agreement confirms revenue; for the buyer, it’s about keeping track of spend.
Who do vendor agreements affect?
Vendor agreements can affect stakeholders across the business:
The procurement team is responsible for buying the service and will negotiate on the commercial aspects of the contract.
The legal team is responsible for the negotiations with the counterparty’s legal team.
The business stakeholder, or consumer, is the person who will be using the goods or services.
The finance team, often led by the CFO, authorizes spend on the agreement and owns the payment process. Where companies don’t yet have an established finance team, this is often handled at an executive level.
Contract managers are responsible for managing the contract after it’s been agreed and signed. Often, if a business doesn’t have a contract manager, this task is left to the legal or procurement teams.
At a tech scaleup, teams may be managing several software vendor agreements at any given time. And finding renewal dates can involve a lot of digging on legal’s part
What’s the manual process?
The vendor will generate an agreement, with already defined terms, and email it to the buying party. Unlike many other contracts, there isn’t usually a process for drafting this type of agreement.
Vendor agreements don’t tend to be heavily negotiated, but there may still be some back-and-forth between legal teams from both sides, with lengthy email chains to make changes. Eventually, the parties will come to an agreement, sign the contract (either with a wet signature or using an eSignature tool) and email copies to each stakeholder.
Post-signature, the agreement needs to be stored and managed – a process that is painful and time-consuming without automation. Usually, the legal or procurement team – who are responsible for managing the contract’s renewal – manually update a shared spreadsheet with key information from the vendor agreement. This can be a massive time drain, especially for tech companies who use and test many types of software; at a tech scaleup, teams may be managing several software vendor agreements at any given time. To make matters even more complicated, renewal dates often aren’t clear on the contract and finding them can involve a lot of digging on legal’s part.
This manual process can also increase the risk of human error – if deadlines are missed, the contract auto-renews and the business is charged.
Why it’s painful to manage vendor agreements manually
Common pain points across the end-to-end process for managing vendor agreements manually include:
Multiple systems: “We move between emails and phone calls to negotiate the agreement, an eSignature platform to agree the contract, and shared drives to store and manage the contract. It can lead to problems with version control.”
No central source of truth: “Contracts are filed in a shared drive, on a personal desktop, or worse - printed and stored in a filing cabinet. Searching for contract versions is a time-consuming process.”
Limited insights: “Signed documents are saved as hard copies or static PDFs. We can’t get valuable data insights on our contract workflow.”
Missed renewals: “Tracking key data is such a manual process, it leads to mistakes and missed renewal deadlines. The business ends up spending more than they need to, and legal gets the blame.”
It is these pain points that often drives companies to automate the vendor agreement process.
Why automate vendor agreements?
Automating the vendor agreement workflow can speed up time to sign. From requesting a purchase to using the product or service, the process is streamlined. This benefits the business stakeholder and various other teams in the business: with an automated workflow, the finance team can minimize unexpected costs from missed auto-renewals, legal can spend more time on high-value work while proactively managing key legal risks, and procurement have data at their fingertips, better equipping them to negotiate with suppliers.
How to automate your vendor agreements
Negotiate the agreement in real time
An automated workflow can speed up negotiations between you and the vendor. In a contract collaboration platform you can comment and edit in-browser, on one version of the contract, with both parties notified of changes in real time via email or Slack notifications.
Approve in seconds
The procurement team will be involved in negotiations on the commercial points of the vendor agreement, but legal should have oversight of the process. With automation, you can set up an approval workflow to ensure legal has the final say on all contracts before they’re sent for signing.
Forget printing, signing and scanning
An automated workflow with native eSignature reduces friction and speeds up signing. Both parties can sign the vendor agreement digitally, at any time, from any device. Once signed, the agreed document is automatically sent to both parties as a PDF.
Contracts in one place
Don’t waste time searching for signed documents – with an automated workflow your contracts are built on structured data, making them dynamic and searchable from day one. Legal can filter through signed documents with ease, knowing all contracts are agreed and managed in a unified workspace.
No more missed deadlines
Vendor agreements may auto-renew, but an automated process has you covered. Legal and procurement teams can track each contract and streamline the process thanks to valuable insights on the end-to-end workflow. You can also set up renewal reminders to stay ahead of key dates and deadlines.
Having all your contracts in one place is incredibly valuable. Searchable documents built from structured data make managing contracts more actionable
If you want to automate the end-to-end contract process for your vendor agreements, look out for a contract collaboration platform with the following features:
A dynamic, no-code editor. This is a must-have from a branding perspective. A rich text editor will allow you, the seller, to send out appealing agreements with engaging visuals. Tables, charts and images can help simplify the information in the document, leading to a smoother negotiation process – and a faster signature.
Commenting. The ability to comment and negotiate in-browser streamlines the negotiation process, maintains an audit trail of changes and manages version control.
Mobile-responsive eSignature. This gives you the opportunity to sign agreements on any device, anywhere, at any time, decreasing time-to-sign and minimizing delays.
Renewal reminders. Notifications mean you’ll never miss a renewal deadline again. Look for a contract collaboration platform that allows you to assign a reminder to a certain person or team, for an even smoother process.
Searchable repository. Having all your contracts in one searchable place is incredibly valuable. If your documents are built from structured data, you’ll be able to find what you need when you need it – and take action. With an effective metadata tagging system, legal can easily run a report on vendor contracts and filter by upcoming renewals.
Email. Automated notifications help make sure the contract process doesn’t lose momentum.
Slack. Receive notifications in Slack when changes are made to the contract, or when it has been signed – offering full visibility on the negotiation process.
Excel. Export your contract data into a spreadsheet and share insights with other teams in the business.
Calendar integrations. Keep sight of upcoming dates and deadlines.
Business intel tools. Pull contracts and metadata into useful reports. Examples of business intel tools include Looker and Tableau.
All your contracts, all in one place
Is managing vendor agreements a pain point for your business? Does your contract process involve multiple systems and no unified workspace for managing contracts?
If so, try Juro and see how a contract collaboration platform can enable your business to agree and manage contracts in a unified workspace.