Vendor agreements can get stuck in inefficient workflows, with unstructured management post-signature. How can digitization help?
This deep dive explores vendor agreements and the benefits of digitizing the contract workflow. Use the navigation below to find out more, or explore our deep dives on other contracts, like MSAs and SaaS agreements.
What’s a vendor agreement? | Who do vendor agreements affect? | What’s the manual process and why is it painful? | How to digitize vendor agreements | Useful features | Handy integrations | Learn more
What’s a vendor agreement?
A vendor agreement defines how companies buy products or services. This contract sets out the terms and conditions of a transaction between the buyer and the seller and is an important touchpoint for the two parties. For the supplier, a vendor agreement acts as a confirmation of payment; for the buyer, it is useful for keeping track of spend.
‘Vendor agreement’ is a broad term that covers most contracts sent by the supplier to the buyer. They are also referred to as ‘supplier agreements’ or ‘supply of services agreements’.
Who do vendor agreements affect?
Vendor agreements involve various stakeholders across the business, including:
The legal team, which is responsible for negotiations with the counterparty.
The procurement team, which takes ownership of buying the service and negotiates commercial terms within the contract.
The finance team, often led by the CFO, which authorizes and keeps track of the payment. When a business doesn’t yet have an established procurement or finance team, these responsibilities are owned at an executive level.
The business stakeholder, who is the person who will use the goods or services being purchased – that is, the consumer.
Some businesses have contract managers who are responsible for managing the document after it’s been agreed and signed. Usually, legal or procurement are responsible for managing the renewal of that agreement.
A manual process increases the risk of human error – if key dates are missed, the business incurs increased costs and legal is blamed as a result
What’s the manual process?
The vendor will generate a vendor agreement and email it to the buying party. The terms are usually well defined and don’t invite heavy negotiation – especially if the vendor is a large, well-established business. Unlike many other contracts, the vendor agreement doesn’t have a set drafting process.
Negotiation between legal teams from both parties usually takes place in back-and-forth email chains and causes problems for version control. Eventually, both parties come to an agreement and sign the contract, either with a wet signature or using an eSignature provider. Copies of the agreement are emailed to each stakeholder, where they are stored on personal desktops, in shared folders or worse, printed and stored in a filing cabinet.
Without a digitized process, managing these contracts post-signature is painful and time-consuming. Usually the legal or procurement team are responsible for managing renewals and keeping track of key dates and deadlines. In the absence of a unified workspace, they manually update a shared spreadsheet with key information. This can be a time drain, especially where tech companies are involved. Tech scaleups are innovative by nature, so will likely experiment with – and so purchase – different types of software. This means the teams responsible for contracts can end up with several software vendor agreements to manage at one time. Renewal dates aren’t often clear, and involve a lot of digging on legal’s part.
A manual process like this also increases risk through human error: if key dates are missed, the business incurs increased costs – and legal gets the blame.
Why it’s painful to manage vendor agreements
The pain points in a manual vendor agreement process are often around storing and managing the contracts post-signature.
No unified workspace: “Contracts are filed in a shared drive or in a personal desktop. Usually there are multiple versions of the same contract, and we don’t have a structured system in place to quickly find and access contracts.”
Limited insights: “We can’t get valuable data insights on our contract process – all our signed documents are saved as hard copies or static PDFs.”
Missed renewals: “Tracking deadlines is such a manual process, it inevitably leads to mistakes. When we miss renewal deadlines, the business ends up spending more money than they need to, and legal gets the blame.”
These pain points often drive businesses to digitize vendor agreements.
No more printing, signing and scanning – if you have a dynamic, digital vendor agreement, parties can sign securely anywhere, on any device
How to digitize your vendor agreements
If you use a contract collaboration platform to digitize your vendor agreements, the workflow usually looks like this:
Collaborate and negotiate in real time
A digitized workflow can speed up the negotiation between you and the vendor. By keeping the document in your contract collaboration platform, you can keep a record of negotiation data and an audit trail of changes. Commenting and editing in-browser also helps to manage version control, with both parties notified in real time of any changes, via email or Slack. You can also set up an approval workflow to make sure legal has final sign-off.
Agree with ease
No more printing, signing and scanning – if you have a dynamic, digital vendor agreement, parties can sign securely anywhere, on any device. Once signed, the agreed document is automatically sent via email to both parties.
Gain valuable insights
A digitized vendor agreement workflow will give you data insights so you can make your contract process more efficient. Use your analytics dashboard to identify hold-ups, keep track of what’s changed since the last round of revisions, and much more.
Never miss a deadline
Vendor agreements may auto-renew, but a digitized workflow has you covered. Legal and procurement teams can set reminders ahead of important deadlines, giving yourself plenty of time to prepare for commercial discussions.
What does end-to-end contract collaboration look like for the modern business? Find out in the ‘Modern contract handbook’.
If you’re building a digitized workflow, the following features will be useful in your contract collaboration platform:
A dynamic, rich text editor. This is a must-have if you want to create beautiful agreements. Engaging visuals and well-crafted contracts can improve your brand reputation and help to simplify the information you’re setting out, reducing time-to-sign.
In-browser commenting. The ability to negotiate within the document helps teams to manage version control, maintain an audit trail of changes and streamline the negotiation process.
Device-optimized eSignature. Sign agreements on the move, anywhere, at any time. With no more printing, signing and scanning, eSignature helps to secure signatures faster.
Renewal reminders. Notifications on upcoming dates will ensure you never miss a deadline again. Check that your contract collaboration platform allows you to assign responsibility and ownership of renewal deadlines to a specific person or team.
Searchable repository. Searchable documents make managing contracts more actionable. With a metadata tagging system, legal can easily run reports on vendor agreements and filter by upcoming renewals. This means you can stay ahead of the game.
Calendar integrations. Stay up to date with dates and deadlines. Notifications will remind you of renewals on the horizon.
Slack. Receive notifications when changes are made to the contract, offering full visibility on the negotiation process.
Email. Automated notifications ensure the vendor agreement process doesn’t lose momentum.
Excel. Export your contract data into a spreadsheet and share insights with other teams in the business.
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
Does your contract process involve multiple systems and a lack of visibility when it comes to storing and managing agreements?
If so, try Juro today. Juro customers, including Deliveroo, Secret Escapes and Babylon Health, report savings of up to 96% of time on the end-to-end contract process.