Contracting: Understanding the Buyer's Perspective
In a business transaction that involves the sale and purchase of some good or service, the seller of that good or service usually has a bit more power and influence when it comes to shaping the contract between the parties. However, to ensure a positive working relationship, not to mention one that will endure beyond the initial transaction, it is important for sellers to take into consideration what most buyers want from their vendors. Here are several things to keep in mind:
For years now, companies have become far too accustomed to utilizing boilerplate, also called standard form, contracts. Granted, these contracts may help save some time and preserve other resources, but with an evolving business landscape, they are not always appropriate. A strong business relationship rests on a contract that has terms that are clear, concise, and equally beneficial to both sides.
Rigorous contract negotiations and meticulously detailed contract drafting are a thing of the past. Now, buyers want to work with vendors who are adaptable and willing to focus on the bigger picture. And, most companies can glean whether the other side has this mindset and approach by assessing the terms they propose.
Creative and Approachable Teams
In addition to expecting more flexible contracts, buyers do not want their counterparts to be difficult, demanding, or stuffy. When problems arise, which is bound to happen at some point, the parties want to know that they can approach the other side and quickly address these issues in a reasonable manner. For the relationship to both thrive and survive, the parties must demonstrate that they are creative and adept problem solvers. If one side fears the wrath of the other, small problems will inevitably become much larger issues, and renewals are incredibly unlikely.
Add Value Beyond a Low Price
Sure, buyers want to save money by paying the lowest price possible for the goods and services that they need, but this should never happen at the expense of quality. And, smart companies know that their contracting partners must offer more than the cheapest price. Competition is fierce in virtually every sector nowadays, so it is important to establish relationships that add value in more ways than one. This may entail business connections, additional production opportunities, or access to untapped markets. Obviously, this will vary depending on each company’s field and expertise, but both sides should bring something unique to the table.
When buyers are deciding whether to retain the services of a particular vendor, reasonable prices and additional benefits are clearly key factors. However, most companies also want to assess the level of risk associated with the transaction. This includes a thorough evaluation of the types of risk present, the allocation of those risks between the parties, and the potential financial consequences of such risk. Ultimately, the size of an enterprise, which usually indicates the resources available and thus the ability to absorb these risks, will affect how risk-averse the parties are. But, with the rising cost of insurance and litigation, most companies prioritize transactions and relationships with minimal risk.
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