Standardizing vendor agreements can help teams ease negotiations and reduce time-to-sign – find out how in this deep dive.
Vendor agreements are some of the most commonly agreed contracts in a business. This deep dive looks at what a vendor agreement is, who it affects and the benefits of standardizing this type of contract. For more on standardizing contracts, take a look at our deep dives on MSAs and SaaS agreements.
What’s a vendor agreement?
A vendor agreement sets out the terms and conditions of a purchase. Whether your company is a SaaS business buying new software or a food marketplace buying produce, the contract that acts as the touchpoint between buyer and vendor is likely a vendor agreement. For the supplier or vendor, the agreement is important for confirming and tracking revenue. For the buyer, it’s about keeping track of spend.
Vendor agreements are also known as ‘supply of services agreements’ or ‘supplier agreements’.
Who do vendor agreements affect?
Vendor agreements can affect stakeholders across the business, including:
- The legal team, who is responsible for the negotiations with the counterparty.
The business stakeholder, who is the end user of the purchased product or service.
The procurement team, who negotiates the commercial term, and is responsible for buying the product or service.
The finance team, who authorizes spend on the agreement.
In cases where businesses don’t have an established finance or procurement team in place, the responsibilities are owned at an executive level, and often delegated to a certain person or team.
If a company wants to quickly and repeatedly generate, distribute and agree vendor agreements, it will benefit from a standardized contract that can be rolled out at scale
Why standardize vendor agreements?
Vendor agreements map the growth of the business: the more signed agreements and closed deals, the greater the revenue. It also helps buyers and vendors allocate resources in a competitive market, as tech platforms and marketplaces agree mutually beneficial terms that help both businesses thrive.
As the company continues to scale, teams will have numerous vendor agreements to agree and manage at one time. And if the process behind these contracts is manual and inefficient, this can become an ongoing and ever-growing project.
The content and process behind vendor agreements needs to be consistent, otherwise the challenges that come from managing these contracts can compound. If a company wants to quickly and repeatedly generate, distribute and agree vendor agreements, it will benefit from a standardized contract that can be rolled out at scale.
A no-code template editor can help with this, ensuring that the contracts you send out are always based on the latest terms defined by the legal team. By keeping variation between documents to a minimum, you reduce the risk of teams deviating from set terms.
And, if these standardized documents are structured with the end user in mind, this will also result in a better experience for the counterparty, strengthening the buyer/vendor relationship and increasing the possibility of repeat business.
How to standardize vendor agreements
Start with why
Remember why you want to improve the vendor agreement process in the first place – to deliver benefits to both parties. The buyer will have a better contract experience, and therefore a positive impression of your business. For the vendor, it will streamline the overall process, easing negotiations and saving time as your company continues to scale.
Perfect your contract template
Look through previous vendor agreements – which versions attracted the least negotiation? Are there any clauses that attract pushback? Is anything difficult to access or understand? Can you increase the likelihood of signature by easing up on certain terms? If your template is optimized for signing, you’ll get to “Yes” faster.
User-friendly design can have a massive impact on how likely counterparties are to sign. Linking, layering and tables can foreground the contract’s most important terms, so the counterparty has all the information easily to hand. Replacing complex legal jargon with plain language and branding your document with company visuals can make the agreement friendlier and more human.
You might need fallback positions for certain vendor agreements. If an agreement is above a certain value, for example, then you might be happy to negotiate certain terms. With a contract collaboration platform that uses conditional logic, you can embed fallback positions within the template itself. This will make it easier to empower other teams to negotiate without legal’s involvement. For more information on automating a contract for self-serve, check out our deep dive on how to automate a vendor agreement.
If you decide to automate your workflow and standardize your vendor agreements, the following features will be useful:
A dynamic, no-code editor. If you want to standardize visually appealing vendor agreements that counterparties want to sign, make sure your contract collaboration platform has a dynamic editor. Images, charts and tables can simplify the information in the contract, leading to a smoother negotiation process.
Smartfields. Make sure your key fields – such as renewal deadlines, values, names and addresses – are tracked and searchable. Smartfields should also two-way sync with your CRM so that data is always up to date and accurate.
Commenting. Negotiate key terms externally with counterparties and discuss internally with stakeholders, all in real time and without ever leaving your browser. Commenting also allows teams to visualise an audit trail of changes and manage version control.
Locked templates. This is a useful feature when legal teams want to define the terms of a vendor agreement at a template level and prevent other teams from deviating. Locked templates can minimize risk and uncertainty when other teams are leading negotiations.
Defined playbooks. Embed your alternative clauses and fallback positions in a vendor agreement template using conditional logic.
Visual timelines. Approvers and signatories have total visibility over the contract through its changes. Visual timelines allow parties to scroll through contract versions to keep track of edits and variation.
Email. Don’t lose momentum on your vendor agreements – automated notifications keep you in the loop with any contract changes
Slack. Get notifications when the contract has been signed or changes have been suggested, so you have total visibility on the negotiation process
Standardize contracts in Juro
Is managing vendor agreements a pain point for your SaaS business or marketplace? If so, try Juro and see how a contract collaboration platform can enable your business to agree and manage contracts in a unified workspace.