Written by Reginald Chan on May 3, 2021

4 Top Tips for Contract Negotiations

Contracts are a necessity for businesses everywhere. In fact, you likely have several contracts on file right now. Some might be up for renewal and you may be searching for ways to improve your contract negotiations. However, if you're running a new business, you might find the concept of multiple contracts daunting and need some advice about how to approach contract negotiations — especially when all you want to do is focus on your core competencies. 

Despite any reluctance, you know that contracts and contract negotiations provide opportunities to expand your business. Moreover, your work with IT FinTech suppliers, attorneys, cloud service providers and various other parties dictates that you learn as much about contracts and negotiations as possible to ensure you make the best deal to benefit your banking industry business. 

If you're in need of some ideas and inspiration before your next contract agreement or renewal, here are four top tips for contract negotiations today. 

1. Work with Your Team to Create a Draft 

Create a contract negotiation team — perhaps it's comprised of IT staffers, managers, legal counsel and company executives — to create a draft detailing your wants and needs from a potential new vendor. Indeed, it's much easier and more effective to sit down with potential new business partners after already asserting what you desire from them clearly and concisely and then offering this party the opportunity to counteroffer or withdraw. 

Before that moment, it's important first to author a rough draft to let your own team members work through the details, determining what is most vital to your organization, such as a budget, services provided, and short-term and long-term value to your banking business. Ensure you have all come to a united and unifying decision before heading into official contract negotiations with any potential vendor. 

2. Set Metrics, Timelines, Constraints and Penalties within the Contract 

Of course, you don't want to lock yourself into a contract that falls short of expectations. If your vendor fails to perform the agreed-upon services as stated in your contract, you don't want to have to go through the motions for another year, two years, or longer, depending on the length of your contract. To that end, experts recommend defining constraints and benchmarks into your contract; after all, you want your vendor to remain reliable throughout the contract to ensure value for your organization. Thus, make sure to negotiate fair and equitable penalties into your contract if your vendors do not meet agreed-upon key performance indicators.

3. Determine Whether You Need Third-Party Accountants for Ongoing Financial Considerations

Whether you need to perform periodic financial or system-related audits to ensure the accountability and security of your systems and data, you might need to engage an accounting firm or require your service organization to do so to perform regular system and organization controls audits.

4. Choose Your Top Negotiator for Your Core IT Deal

You might hire someone specifically for the role of negotiator-in-chief for your next core IT deal, or you might identify that person on your team and appoint them to the position. In any case, you want someone who fights for your banking business's interests with the right balance of cordial tone and fierce concern for your organization. Your negotiation professional won't accept outdated technology and one-sided deals that too many organizations regularly find themselves doing. 

Prepare to Get the Best Contracts for Your Business Every Time 

With the right negotiation strategy, you can help your professionals get the best deals for your banking business every time. By laying out everything you want, creating ironclad expectations and penalties for unmet expectations, ensuring system and financial accountability, and choosing the best negotiator to bring home the best deal, you'll enjoy stronger and more satisfying contract negotiations in the short and long term.

Article written by Reginald Chan
A meticulous entrepreneur by nature and a serial entrepreneur. Founded a few awesome startups including Marketing Lancers, WP Maven and TheMarketingHuddle.com. Reginald is a sought-after success coach, digital marketing consultant and TEDx speaker from Asia. Currently, he teaches others how to make money online for free.

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