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Are large volumes of service contracts creating friction for your legal and business teams? Check out this guide to service contract management.
What are service contracts?
Service contracts are legally binding agreements between a service provider and a client, detailing the scope of services to be provided, payment terms, duration, and other essential conditions.
These contracts govern the relationship and ensure both parties understand their obligations and expectations before, during, and after the delivery of the service.
However, they vary wildly depending on the nature of the business and the specific service being provided. With that in mind, let’s run through a few common examples of service contracts, and when they’re used.
Service contract examples
There are plenty of contracts that fall into the category of a service agreement, from coaching agreements all the way to plumbing, photography, and waste management. Other examples include:
- Maintenance agreements: Contracts for regular maintenance of equipment or property. For instance, a company might have a maintenance agreement with an HVAC service provider to ensure their heating and cooling systems are regularly inspected and maintained.
- Consulting services: Agreements with consultants to provide expertise and advice in specific areas. For example, a business may hire a marketing consultant to develop and execute a new marketing strategy.
- Software as a Service (SaaS): Contracts outlining the terms for using cloud-based software. This could include agreements with a software provider for access to a project management tool, also known as SaaS contracts.
- Outsourcing agreements: Contracts for outsourcing business functions like IT support or bookkeeping. An example would be a company outsourcing its IT support to an external provider to handle technical issues and system maintenance.
- Agency agreements: Contracts used to hire an agency to perform a specific function that can’t be handled in-house or by an independent contractor. Examples include sales agency contracts, modelling agency agreements, and more.
Why are service contracts difficult to manage?
Service contract management presents a few unique challenges that many other business contracts do not, largely because of their variety and versatility.
The challenges of service contract management typically include:
Volume and variety
Managing numerous service contracts with different terms can be overwhelming. For example, a software company might have contracts with several clients, each with distinct service scopes and renewal dates.
One client might require quarterly software updates, while another needs monthly maintenance checks. This diversity makes tracking and managing each contract more complicated.
Complex terms and conditions
Service contracts often include detailed deliverables and timelines. For instance, a facilities management company may have long-term contracts to provide cleaning, security, and maintenance services at different intervals.
Missing a scheduled maintenance check or a security upgrade can lead to contract breaches, unaccounted renewals, or disputes, resulting in penalties and damaged client relationships.
Compliance requirements
Ensuring all service contracts comply with legal and regulatory standards is challenging, especially when multiple departments handle contract drafting. For example, in the healthcare industry, service contracts must comply with strict patient data protection laws.
A single mistake in contract language can lead to severe penalties and legal action, jeopardizing the organization’s reputation and financial stability.
Fortunately, there are a few best practices and tricks that will empower your legal and business teams improve the way you manage service contracts, from initiation all the way to execution. Let’s cover them now.
Service contract management best practices
- Define clear objectives: Clearly outline the goals and expected outcomes of each service contract. This helps in setting measurable performance metrics and ensuring both parties have a mutual understanding of the contract’s purpose.
- Engage stakeholders early: Involve all relevant stakeholders in the contract creation process from the very beginning. This ensures that all perspectives are considered, and any potential issues are addressed early.
- Set up alerts and reminders: Configure alerts and reminders for critical dates such as renewals, expirations, and compliance checks. This helps in staying proactive and avoiding any lapses.
- Monitor performance regularly: Continuously monitor the performance of service providers against the agreed-upon metrics. Regular performance reviews can identify areas for improvement and ensure service quality remains high.
- Maintain thorough documentation: Keep detailed records of all communications, amendments, and approvals related to each contract. This documentation is essential for resolving disputes and maintaining transparency.
- Negotiate with flexibility: While it’s important to protect your interests, being too rigid in negotiations can hinder the contract’s success. Strive for a balance that meets both parties’ needs and fosters a collaborative relationship.
- Use contract lifecycle management (CLM) tools: Implement CLM software to manage the entire contract lifecycle from creation to renewal. These tools can automate workflows, track key dates, and provide valuable insights into contract performance.
Now, let’s turn our attention to the final point: what’s possible when you manage service contracts in a system like Juro.
Streamline service contract management with Juro
Juro’s contract management software offers a robust solution to address the challenges of service contract management:
Legal AI Assistant
Accelerate the contract drafting and review processes with Juro’s legal AI assistant. Service providers can analyze contract language to identify key clauses, suggest improvements, and measure compliance with industry standards and internal guardrails.
Centralized repository
Store all service contracts in one secure contract repository, providing easy access to contract data. This single source of truth simplifies contract organization, retrieval and management, allowing you to quickly find and review contracts with various clients.
The repository provides instant visibility into contract statuses, renewal dates, and service obligations, making sure all key contract data is captured and actioned in good time.
Collaborative workspace
Manage service contracts end-to-end in a single, browser-native workspace, facilitating seamless collaboration across teams. Your legal, sales, and operations teams can work together in real-time, making edits, comments, and approvals without leaving the platform.
This ensures that all stakeholders are aligned on contract terms and updates, enhancing transparency and reducing the likelihood of miscommunication or delays in contract execution. This is perfect for bridging the gap between the teams delivering a service, and the ones offering it.
Automated reminders
Automate key tasks like renewal tracking, compliance monitoring, and service contract reporting to reduce manual effort and minimize errors.
Juro’s automated contract reminders ensure no critical dates are missed, including renewal deadlines or service milestones, among other things.
Seamless integrations
Empower your business teams to self-serve on service contracts from the tools they already use, enhancing efficiency and productivity. Integration with existing business tools, such as CRM or project management software, ensures smooth workflows and reduces the need for manual data entry.
Juro’s seamless integrations mean your teams can focus on delivering high-quality services and managing client relationships, rather than getting bogged down by repetitive admin tasks, like populating contracts.
Streamline service contract management with Juro
With robust contract automation features and integrated workflows, Juro empowers service providers to focus on delivering exceptional services while minimizing the burden on legal teams throughout the contract process.
To find out more about Juro’s intelligent contract management software, and how it empowers teams like yours to manage contracts 10x faster, book a demo below.
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