Business-to-business (B2B) eCommerce is one of the strongest sectors of the growing eCommerce industry, forecasted to grow by up to 7.3 billion within five years with a compound annual growth rate (CAGR) of 11.92%. Because of how fast-growing it is, many strategies and solutions to further enhance the sector and its operations are continuously being developed. However, one factor that is often overlooked is contract management.
B2B contract management is a critical aspect of the eCommerce sector, as it can help businesses reduce risks, improve compliance, and enhance performance. However, it can be challenging due to various reasons, such as the complexity of contracts, multiple stakeholders involved, and the need for compliance. Manual processes and lack of visibility can lead to errors and delays, which is why it is important to have a streamlined process in place to be able to take into account the unique considerations that come with B2B, all while managing contracts effectively and simplifying the process for the end buyer.
Below are some of the best contract management practices for B2B that can help reduce risks and improve efficiency.
Centralizing contract management
Centralizing contract management will allow businesses to have improved visibility and better control over contracts in a simple manner. For example, contract management software like PandaDoc can ensure this centralized contract management through features such as document repository, user management, audit trail and history, and many others. These can help with reducing duplication of efforts, which will cut back on human resources. Most importantly, they will also ensure consistency in contract terms and conditions. This is particularly important for B2B businesses, as having multiple parties involved naturally means being more prone to inefficiencies, inconsistencies, and increased risks.
Collaborating with stakeholders
Collaboration among stakeholders is important for effective contract management, especially in B2B. Proper collaboration can help ensure that all parties involved are aware of the contract terms and conditions. This can be done through sharing acquired data with stakeholders and using that data to facilitate collaborative problem-solving. This will help prevent and resolve any disputes or issues that may arise during the contract’s lifecycle, as well as ensure that all parties are working towards common goals.
Using automation tools
Automation tools can help businesses reduce manual efforts as well as the errors that are prone to happen along with them. It is especially helpful for B2B businesses that require a lot of collaboration. These include ‘SKU by Store’ which automatically tracks inventory, shipping costs and includes AI to help the buyer manage inventory controls to multiple stores, lowers shipping costs, leverages volume for further discounts
Other tools can come in the form of contract renewal management software as demonstrated by Softrax. The renewal software from Softrax can automate renewal processes to ensure that they happen in a timely manner and for the appropriate revenue amount. It also ensures that any agreed-upon terms, such as an uptick in renewal rates, are considered. In addition, automation tools allow for better insight into renewal revenue by projecting displays of both past and future views of deferred and recognized revenue streams.
Maintaining accurate and up-to-date records
Accurate record-keeping is crucial for ensuring contract compliance, especially for B2B businesses that involve a lot of communication between parties. It enables everyone involved to track and monitor the progress of the contract, identify potential issues on either side, and resolve any issues that may arise in a cordial manner. It also provides a clear audit trail in the event of any legal disputes. Failure to maintain accurate records can result in non-compliance and even potential legal and financial consequences. This can be ensured by assigning responsibilities for regular record-keeping and regularly reviewing and updating records.
Measuring performance and compliance
Measuring performance and compliance is important to track progress toward goals and ensure that contracts are meeting objectives. Businesses can utilize data visualization tools like Google Charts, which make use of metric features. Some of these metrics include contract cycle time and renewal rate, which identify important trends and patterns. The visualization of accumulated data will provide a better presentation of critical points, which can be very helpful for B2B businesses with multiple parties involved to avoid any misinterpretations. This will, in turn, allow for more informed decisions to be made. Additionally, it will not only measure performance but also identify any possible areas for improvement.
All in all, contract management in B2B businesses seems much trickier compared to other eCommerce sectors due to the unique considerations to take into account. With a combination of the right tools and proper practices, B2B businesses can manage their contracts more efficiently and further the growth of their business.
For more on managing your eCommerce business, check out our other posts and services on CSS Commerce.
