There’s nothing more important to business growth than sales contracts. They need to be created, issued and signed to recognize revenue - whether it’s a commercial lease, a SaaS agreement or any other kind of sales agreement, you can’t grow without it.
It’s surprising, then, that sales contracts are often pretty awful - both in terms of content, and in terms of the process by which they’re agreed. And bad contracts lead to bad outcomes: deals that go unsigned, or messy contracts that create risk, or poor experiences that sour the relationship between the vendor and its new customer.
Through helping companies to automate them, we’ve learned a lot about sales contracts - what to do, what not to do, and how to get them signed faster. If you'd like to automate your sales contract process with Juro, get a demo now - click the button below.
A sales contract is a binding agreement through which the seller transfers goods or services from one party to another. It outlines the terms and obligations involved in a new commercial relationship, including the specific legal responsibilities a buyer and seller owe to one another.
Sales agreements are amongst the most common types of contract in the business world, and due to high volumes, often also the first contract workflow to be considered for automation.
What is the purpose of a sales contract?
The broad purpose of a contract is to formalize new relationships and record all of the various rights, responsibilities, and obligations of each party. However, the purpose of a sales contract is more specific, as sales contracts are designed to ensure that a product or service is delivered to a customer on the terms agreed and that a customer has fulfilled their duty to pay for the goods.
The purpose of a sales contract is to record the details of a transaction and offer protection to buyers and sellers by making each party's promises legally binding. Sales contracts afford this legal protection for a whole range of different transactions, including those made between businesses and consumers.
What is included in a sales contract?
But what exactly does a sales contract look like, and what should it include? Here are just a few examples of what a typically sales contract will comprise of, and why:
A detailed description of the services or products being sold. A sales contract should describe clearly and in detail what goods or services a buyer will receive, and what this will look like (e.g quantity, size, weight, type, model).
The agreed terms of payment. Sales contracts must outline when payments are due, how much payments are, and how to pay them (e.g what payment method should be used?)
An explanation of how the goods or services will be delivered. Sales contracts should outline exactly how the buyer can expect to receive the goods or services. If the subject of the sales contract is a physical item, this might include a time and method for delivery.
Information about the warranties and guarantees available. A sales contract should include details of any guarantees and assurances about the quality and reliability of a product or service. These can be implied or express warranties.
Details about the inspection period available to buyers. A sales contract will usually explain how long a buyer has to inspect the goods or services after they've been received, and what to do if they aren't up to scratch.
That isn't all a sales contract will need to include, though. Different types of sales contracts will also include clauses and terms that are relevant to their specific use cases.
For instance, a SaaS agreement will usually outline terms relating to auto-renewals, data rights, security and maintenance - all of which won't typically be included in other sales contracts.
The contents of a sales contract will often vary depending on the nature of the sales contract. Naturally, a sales agreement for a property will look dramatically different from a sales agreement for a piece of software.
Sales contracts are an effective way to ensure that both parties know what to expect of one another as well as what is expected of themselves. These sales agreements act as a single source of truth for parties that are unclear about what they've agreed to or fail to keep to their promises.
Prevents miscommunication 🗣️
When negotiating the terms of an agreement outside of a contract, things can quickly get messy. As we often see with oral agreements, there's a lot of hearsay and it's hard to determine what was really agreed between parties, particularly where there has been poor communication and misunderstanding.
A sales contract ensures that everything is recorded in one place and agreed upon, giving parties an opportunity to flag anything they don't understand before signing.
Offers legal protection ⚖️
In the event that something goes wrong, a well-written sales contract should offer both parties legal protection.
For example, if your goods arrive damaged, or payment isn't received on time, parties can take action based on the terms laid out in the sales contract, and this can provide some assurance to businesses and consumers that their rights are protected.
Ensure businesses receive payment💰
According to the CPA, over 50,000 small businesses go bust each year due to late payments and poor cash flow. Sales contracts are an effective way to outline exactly when a seller should expect to receive payment, and if this is breached, they could potentially take action. Moreover, sales contracts are essential to ensuring that businesses are paid fairly and on time.
Help parties maintain good relationships 🤝
Since sales contracts are used to formalize new relationships and keep a record of mutually agreed terms, they are often a great tool for maintaining positive and lasting relationships, too.
This is because they often eliminate confusion by providing clarity, and they also ensure that the terms agreed when signing are ones that benefit both parties.
Who creates sales contracts?
Within a business that uses a manual contract workflow, sales contracts are typically created and owned by legal, with some input from sales. This can work well for small businesses that process very few sales contracts each month, but as soon as your company begins to create, agree and sign higher volumes of sales contracts, this approach can create delays and inefficiency when closing deals.
That's why a lot of scaling businesses find it beneficial to automate their contract workflow with contract automation software like Juro. This type of contract tool enables sales teams and other commercial teams involved in the contracting process to self-serve on sales contracts themselves, rather than relying on an already busy legal team to do the heavy lifting.
With self-serve in place, sales teams can set to work getting contracts signed faster, as legal teams can act as an enabler on contracts, rather than a blocker.
9 hacks to get sales agreements signed faster
It's all good and well knowing why sales contracts are important and what they should include, but a sales contract will mean nothing without those all-important signatures to make it legally binding.
But what can you do to get contracts over the line and capture revenue more quickly? Below you'll find nine of our hacks for getting sales contracts signed faster. You're welcome!
1. Keep sales agreements simple
… rather than something incredibly complicated. Humans naturally favour fluency and simplicity when they’re processing information; lawyers, on the other hand (while still human) have a natural bias towards complexity.
Making sales contracts simple, so counterparties can read and understand them quickly, is perhaps the biggest shortcut to achieving a quick signature. It’s not always easy making things shorter and simpler. This is particularly true for contracts, which unavoidably contain some difficult or complex concepts from time to time.
This is the key document that needs to convince your potential new customer to take the plunge and eSign on the dotted line. Don’t send it out looking like a high school project from the 90s. Brand it with your logo. Remove as much clutter as you can. Include images and illustrations if your contract editor can handle them.
Document design shouldn't be an afterthought - you want your prospect to be excited about the idea of working with you, not confused and disengaged by an ugly wall of text and bad formatting. This goes for all business contracts, not only sales ones.
3. Don’t hide the contract’s key details
If there’s a term or clause that counterparties often negotiate, you aren’t going to get around it by sneaking the words into a sub-paragraph in the middle of the contract and hoping they don’t notice. And even if you could, do you want to start your commercial relationship by trying to hoodwink them?
Getting sales contracts signed quickly means getting your counterparty up to speed on the key terms quickly. So put key terms like commercials, duration and so on in a table at the top of the document - better information design should lead to better alignment on both sides, and a quicker outcome.
4. Consider your audience
A sales contract is like any other piece of writing - it needs to be written with its audience in mind. Whether it’s a simple sales agreement for a software subscription, or a complex digital licensing agreement for two corporate partners, content needs to be tailored for its reader.
Increasingly this means the same approach for B2B contracts as for B2B. After all, businesses are run by people too. Don’t soak your audience in dense legal jargon; don’t condescend; don’t project hostility or elitism. This is the documentary equivalent of a handshake - make it friendly!
5. Prepare your sales contract’s fallback positions
If your sales agreement is with a bigger or more powerful counterparty, then negotiation is likely. To land deals of a certain size, you might need to be prepared to bend or yield completely on certain terms in the contract.
Get clear on the fallback positions you’d be prepared to accept. If your contract automation platform allows it, you can use conditional logic to create these branches within your contract template - for example, varying the indemnity cap automatically, depending on the value of the deal.
However, if you have fallback positions you need to rely on again and again, and they’re commercially acceptable, could you just soften the terms to that level to avoid contract negotiation altogether? If you optimise for signing, rather than your preferred terms, you might end up with more signatures.
For higher value, more complex contracts, you might want to consider using a deal desk process to establish these fallback positions.
6. Make the sales contract management process frictionless
Once you’ve done all this, and you have a perfect sales contract template that will attract minimal negotiation, whilst giving your counterparty a great experience and setting your relationship up for success - automate it.
Create your template as a digital document within a contract automation platform. Salespeople can then generate their own contracts on demand, without needing a legal counsel, or other senior figure, to supervise the contract creation process.
7. Control contract access
You might be comfortable with salespeople creating contracts from the defined template, but you probably wouldn’t want them to freestyle contract terms and go around changing parts of the document to get the deal done.
In Juro you can lock parts of the contract, so that only template owners can edit them. Day-to-day users simply go through a natural language Q&A flow to populate key fields in the contract - dates, names, dollar values, and so on - and everything else is fixed by the template.
This helps sales teams move quickly to get their contracts agreed, but without the risk of rogue terms creeping into the contract.
8. Negotiate in-browser (if you have to)
As mentioned above, it’s better to try and create templates that attract minimal negotiation, or none at all. This might mean having less advantageous terms in the contract, but it should mean that you sign more of them.
However, negotiation at some point is probably unavoidable. So if you have to do it, do it in-browser.
By using a contract automation platform with internal and external commenting and negotiation, you can make sure to capture all negotiation data. If negotiation happens offline, then you’ll never know why changes were made and it’ll be impossible to learn from these experiences and improve your contract process accordingly.
If you negotiate in-browser in Juro, there’s a secure, digital audit trail of what was changed when, and by whom - so your sales team can learn for next time.
9. Sign sales contracts on mobile
If you really want sales contract process to accelerate, then you need to empower counterparties to sign on mobile. Reps can be sending contracts from their phone on the way back from meetings to get things moving. If eSignature is a step up in efficiency from wet signature, then mobile eSignature is a step up again.
Juro features secure, mobile-responsive electronic signature on any device, as part of a host of features designed to enable businesses to automate routine contracts at scale - all within the browser.
To try it, and to discuss any of the techniques outlined above, hit the button below and supercharge your sales contract process today.