There are many differences between buy-side contracts and sell-side contracts, but there are also many similarities. Most companies have a need for both, and effective contract management can unify your business teams while enabling more efficient processes. Choosing a platform that handles both purchasing and sales contracts is a smart decision.
What is a buy-side contract?
A buy-side contract is an arrangement to purchase services or goods from a seller in exchange for something of value, like money. Your procurement department likely manages buy-side contracts. This department handles:
- Procurement of necessary materials or services
- Vendor management
- Facilities management
Some buy-side contracts are simple—especially for low-value items or recurring purchases. Templated buy-side contracts make it easy to standardize agreements and simplify the negotiation process. Teams can rely on pre-vetted forms from the legal department when negotiating with counter-parties. This template also makes it easy to revise the agreement when necessary.
More advanced deals may also require other documents, such as a request for proposal. Digital contracting makes it easy to create templates for any documents your procurement team may need to do its job. It also makes modifying an existing template easier than starting from scratch. A buy-side contract should be prepared with any attachments or related agreements that may be necessary for your deals.
Benefits of contract management software for buy-side contracts
There are countless benefits to using contract lifecycle management (CLM) software to manage buy-side contracts. The system keeps finance, legal, and the procurement team in lockstep. It allows your procurement team to:
- Approve all purchases in a single system
- Track purchases and buy-side contracts through the contract workflow
- Monitor company purchases alongside renewals and obligations
- Recognize potential discounts within existing contracts
- Easily negotiate deals with vendors and other counter-parties
- Ensure all goods are received and paid for following the contract terms
Tracking your spending is difficult if your buy-side contracts vary by source, supplier, or department. Instead, you can create and store them within a single CLM system.
With sophisticated digital contracts, your buy-side agreements give you powerful insights into your process by unlocking key data points within them. These data points and metrics help inform your team about how to improve and where to make necessary changes. This data can provide real solutions to the business challenges you face.
What is a sell-side contract?
Sell-side contracts are for selling and delivering goods, securities, services, and much more to a buyer. The sales team primarily handles these contracts. A sell-side contract is a revenue-generating agreement, so it deserves careful monitoring and management.
Staff involved with the sell-side contract often need access to critical information, such as:
- Approved language for standard terms and conditions
- Contract templates for sales
- Existing contract information for clients and the ability to easily update it
- Contract metadata to help with upselling
- Current contract fulfillment and renewal dates
Sell-side contracts put your company on the hook for many obligations. Old systems make it impossible to easily stay on top of the crucial information you need to comply with your contracts. CLM software gives you improved functionality in compliance and reporting across all contract types.
Benefits of contract management software for sell-side contracts
CLM software lets you speed up your sales cycle and improve your sell-side contracts. It provides seamless customer relationship management (CRM) integrations that make it easy to:
- Approve sales with pre-approval by legal
- Create sales contract templates for multiple departments
- Spend less time on repetitive administrative work and more time on scalable processes
- Stay up-to-date on contract versioning
- Keep all contracts in a data repository for a single source of truth
- Accurately forecast sales based on real-time data
- Know where your contracts are in the contract lifecycle at all times
Managing both with contract lifecycle management software
CLM software can handle the similarities and differences between buy and sell-side contracts. The core elements for these contracts often apply to both sides. These include:
- Financial management of the agreements
- Contract compliance monitoring
- Performance management with contract data metrics
- Relationship management with customers and vendors
- Contract negotiation, redlining, and finalization
A well-designed CLM platform handles all of these aspects and more. It can handle all contract types on both the sell- and buy- sides. You can get improved functionality for every department when you create and manage your contracts this way.
Quiz: test your own contract management process!
Why it makes sense to manage both in a single system
While it makes sense to have separate buy and sell side departments within your business, managing the contracts differently does not make sense. A centralized management system lets you handle both types of arrangements without separate systems.
When you do, it:
- Won’t duplicate your processes
- Will reduce the burden on IT, your administration, and your legal department
- Consolidates your contract and document management into a single repository
- Keeps you from paying for two systems
- Limits the time it takes for integration and training
- Aligns your teams with the same data (i.e., a sale triggers procurement to get the materials you need to fulfill the order)
- Provide data and insights into all contracts
Many companies prioritize a specific department when starting with CLM software. For example, they may choose to streamline sales and integrate sell side contracts first. Once they realize the software’s full potential, companies expand from there and include the rest of their departments.
You can leverage the benefits of CLM software for both sides. The right software makes it easy to get started and to see a real return on investment quickly.
Manage buy-side and sell-side contracts with CLM
Effective CLM software puts the tools in your hands. You can manage your buy-side and sell-side contracts easily and in a single location. You can streamline how your business buys and sells products or services with one system.
Despite the differences, CLM can help you easily handle either a sell-side or buy-side contract. With the right system, you can create form agreements, manage data, and communicate with ease.
Ironclad is not a law firm, and this post does not constitute or contain legal advice. To evaluate the accuracy, sufficiency, or reliability of the ideas and guidance reflected here, or the applicability of these materials to your business, you should consult with a licensed attorney. Use of and access to any of the resources contained within Ironclad’s site do not create an attorney-client relationship between the user and Ironclad.
- What is a buy-side contract?
- What is a sell-side contract?
- Managing both with contract lifecycle management software
- Quiz: test your own contract management process!
- Why it makes sense to manage both in a single system
- Manage buy-side and sell-side contracts with CLM
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