6 Key Details You Should Consider Before Renewing A Contract

Dealing with contracts is among the most common business practices. This is why these 6 key details need to be considered before renewing any contract. 

When To Renew A Contract

Another very important detail to consider before renewing a contract (without going to the market) is essentially the same as deciding that a single source procurement will obtain the best value for the money. In other words, since similar considerations apply, you need to be able to demonstrate that the contract renewal is supported by business needs and that the price is competitive and reasonable. (If you have a home-based business, this option can be flexible).In addition to this, you should demonstrate that the contract renewal will deliver value for money. Furthermore, you need to demonstrate that better value for money would not be obtained by re-approaching the market. While these are all very financial objectives of renewing the contract, they should be considered as highly essential. 

Read and Understand the Contract

Every contract is made out to outline the details of an agreement. Some contracts tend to be lengthy and it is entirely up to you to fully read over all of the details, including any fine print. The reason why this is important is that you need to ensure that you don’t gloss over anything important. If a stipulation is made in a contract, that means it’s there for a reason. In addition to this, you also want to ensure that you understand everything outlined in the contract, because if circumstances arise you cannot disagree if it was something your signature shows you ultimately agreed to.

Know Who To Negotiate With

Among some of the key details that you should consider before renewing a contract are the people you are going to be negotiating with. It’s important to know who to negotiate with, either the agent or the client. Negotiating solely with the agent is a solid strategy since their loyalties side entirely with their client. Negotiating with the client only is somewhat difficult since they will ask that you speak to the agent, who they are paying to get them the best deal. You should also have in mind that both the agent and the client want what is best for the client, not what is best for you. One of the best negotiating strategies is to keep both of them involved in all of the negotiation communications to avoid any miscommunication by any of the involved parties.

Set Aside Some Time

One of the ways to ensure the contract renewal will be stressful is not to set aside enough time to review it. To avoid making these decisions on the exact day you’re supposed to renew it, ensure that you set aside more than a day to review all the facts. More information on why it’s important to build in time for contract review can be found on this website, among other key details you should consider to make an informed decision. Some of these details are to reassess the current value of the contract as well as to speak to important stakeholders within the business.

Know The Objectives

One of the most important details you should consider before renewing your contract is to know what the exact objectives of doing so are. Many would argue this is the most important thing to consider as it will set the pace for the entire process. Some of the most common renewal objectives include obtaining the first renewal (especially if the first contract is six months or less) to ensure you can demonstrate that you have staying power to the potential future clients. The next common objective is to increase your rate if the market has risen or maintain it if the market has dropped. If you’re inside IR35, renegotiate to get yourself outside of it. Lastly, if negotiations are unsuccessful, the objective is to ensure you leave on a good note without burning bridges.

Final Thoughts

Last but not least, you need to be sure that all dates and all contact information are up-to-date. People, phone numbers, titles, and addresses change all the time throughout a contract’s execution. This is why you need to make sure your point-of-contact and their information have not changed. That way, if any issues should arise, you will have someone to whom you can reach out and don’t have to chase down a new contact. When you have decided to renew a contract, you also need to make sure to set new dates for obligation and renewal management in your contract management system (if you don’t have one yet, it’s strongly recommended to make it as soon as possible).

Be sure to read all of these key details you should consider before renewing contracts as making mistakes during this process can have serious consequences you will want to avoid at all cost.