Business contract cycle is a period of time in which the economic activity of the business is discussed among the parties in action and then they come with up with a fixed contract; the contract may be indefinite or applicable to a limited number of years. Unless there is a provision built into the contract, it cannot be broken without the agreement of both parties involved. There are a number of steps typically involved in the business contract cycle. Here is a brief summary of the contract cycle.
Negotiation: The process of a business contract cycle starts with negotiating of the terms. It often includes prices of the goods or services which might be offered to the potential clients. The vendor wants to maximize profit and the recipient wants to maximize the savings. Negotiation allows both parties to arrive at a point where both feel like it is a good value. A win-win. If only one side wins then the contract will likely fail at this point.
Authoring: After the negotiation the contract cycle moves to authoring. Authoring is a critical part of the contract process as this is where the terms agreed to in negotiation are outlined in writing. Product and/or services are clearly defined so all parties know what is to be expected for the prices given. Accuracy is of utmost importance so there is no room for misunderstandings as the contract is carried out. All the records can be maintained in contract management software, to avoid any confusion.
Approval: Once everything is detailed in writing as a representation of what has taken place in discussion, wether verbal, email, fax, text or any other form of communication the contract needs approval. The represntatives with the proper authority from both parties will need to review the written contract to ensure accuracy so that nothing is overlooked. Both will give their approval typically by written signature.
Amendments: Amendment is done in any contract when something needs to be changed. One or both parties may see a need to modify the contract terms. It could involve the price, the time of delivery or any other aspect of the contract. The initiating party will need the approval of the other member to the contract and the amendment is put in writing and signed off by both. At this point it becomes a part of the contract that will add to or supersede the existing contract.
Execution: Execution is following and playout out the terms of the contract and any ammendments so both parties perform what they agreed to do.
If you want to excel at all the steps of the business contract cycle, then contract management software can be an integral part of helping you succeed. Contract management software will help walk you through all the processes of the cycle step by step with ease virtually eliminating any kind of error. Highly accurate and more efficient contract processes will help your business excel.
