As the end of the year or quarter approaches, it's not uncommon for buyers to raise objections about getting deals done in a timely manner. One common objection is that the legal team is out for the holidays and redlining the contract won't be possible until next week. While this may seem like a roadblock, there is a solution that can benefit both parties.
Securing legal approval for contracts can often be a time-consuming process, especially towards the end of the year when deadlines loom and legal teams may be on holiday. However, with strategic planning and clear communication, it's possible to navigate these hurdles effectively.
Here are two essential tips to help expedite legal approval for contracts and ensure that deals are closed smoothly and promptly.
1. Ensure Agreement on Material Terms
Before diving into the legal complexities, it's crucial to establish that the fundamental aspects of the contract have been agreed upon by both parties. These material terms include:
- Price: The agreed-upon cost for the goods or services.
- Number of Users: The specified number of users who will benefit from the services or products.
- Length of the Contract: The duration for which the contract will be valid.
These terms form the bedrock of any contractual agreement. Without consensus on these key points, progressing with the contract becomes challenging. Ensuring that both parties are aligned on these elements can streamline the subsequent legal review and approval process.
2. Use Conditional Signing with Future Effective Dates
Once the material terms are settled, you can employ a strategic approach to move forward with the contract even if the legal team is temporarily unavailable. One effective solution is to utilize conditional signing with a future effective date. Here’s how you can implement this:
- Effective Date Strategy: Have the buyer sign the contract with an effective date set for 12/31. Include a clause stating that the terms of service will be mutually agreed upon by 1/6/23.
- Interim Agreement: This approach allows both legal teams additional time to review and finalize the terms of service after the holidays, while still enabling your company to recognize the deal and associated revenue within the current fiscal year.
- Preserve Incentives: This ensures that the buyer can still benefit from any discounts or incentives tied to a contract signed by the end of the year.
This method not only facilitates the closing of the deal but also ensures that both parties’ interests are safeguarded. It's important to communicate openly with both legal teams to ensure that they are comfortable with this approach and understand the potential risks and benefits.
Clear Communication and Collaboration
For the conditional signing approach to work effectively, maintaining open and honest communication with your legal team and the buyer's legal team is essential. Ensure that:
- Expectations are Clear: All parties understand the interim nature of the agreement and the importance of finalizing the terms of service promptly.
- Risks are Managed: Both legal teams acknowledge and accept any risks associated with the delayed finalization of the terms.
By fostering a collaborative environment and clearly articulating the reasons and benefits of this approach, you can increase the likelihood of both legal teams agreeing to this interim solution.
Conclusion
Navigating the end-of-year or quarter rush and ensuring contracts are approved can be challenging, but with strategic planning and effective communication, it is possible to overcome these obstacles. By ensuring that material terms are agreed upon and using conditional signing with a future effective date, you can close deals efficiently, benefiting both your company and the buyer. This proactive approach helps both parties start the new year on a positive note, with the deal securely in place and mutual benefits realized.
Embracing these strategies allows you to stay ahead in the fast-paced business environment, turning potential roadblocks into opportunities for success.
Happy closing and check out Seamless AI if you need the best sales software to help you close more deals.
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