My week in the world of commercial contracting has been varied and challenging. I’ve provided contract support to two very different businesses. The first, ’emergency’ client who called on me to provide immediate contract support on a business critical deal which needed to be signed…. um…. the day before(!). Then the other end of outsourcing contract support – the ‘planner’ client, who I’ve been working with for a few months as their Commercial Director. I have been supporting them with the creation of new data protection policies and procedures in readiness for the introduction of the GDPR next May.
These two clients have really made me think about how different companies view and approach their commercial contract support.
For some we are firefighters, called in at the last minute to extinguish the flames of a potential commercial disaster. We may receive a panicky call requesting urgent assistance (the deal needs to be signed the following day!) and despite the fact business discussions have occurred over the previous 6 months, the need for commercial contract support is only requested at the point one of the parties waves a contract in the air. We can, and do, provide support in these circumstances, but getting up to speed with 6 months worth of business discussions, representations and commitments can be challenging – particularly with an imminent execution deadline!
For others (like my GDPR client), commercial support is viewed as a core component of their business operations and the need for commercial advice in respect of transactional matters, as well as internal operations is ingrained. These businesses benefit from regular, strong commercial contract support from someone who understands their business. They value how consistent, frequent outsourced commercial management can improve revenue as well as minimise risks. These businesses understand the importance of having their commercial representative as a core member of their management team, advising on business opportunities and internal legal requirements at the earliest stage, rather than adopting an emergency fire fighting stance – a proactive rather than a reactive approach. They can have their commercial cake and eat it!
So why is it some clients only request commercial contract support in an emergency?
The predominant reason, for most, is that they are conscious of costs. By doing the majority of negotiation themselves, businesses avoid paying out an hourly fee for contract support. However, the belief that this saves them money is often misconstrued! By engaging with outsourced commercial management early, key issues will be identified during initial negotiations and the right approach taken from the onset. This early engagement helps close deals faster – saving internal negotiation costs and enabling the business to benefit from revenue earlier. Yes!! Closing deals faster! With strong commercial support, businesses will focus on the matters which are important to them and, with the input of highly experienced commercial resources, will reach swift resolution of their contract negotiation in an effective way.
So what are the options to obtaining commercial contract support other than on an ah-hoc basis?
Business could, of course, recruit their own in-house commercial resource, but unless part of a team, the individual is just that, an individual – without access to other experienced team members or extensive legal resources. There are of course all the employment issues and costs to consider, but in addition to this, unless there is sufficient level of work, the in-house commercial support could be sat twiddling their thumbs – an expensive resource! In contrast, by engaging with an experienced outsourced commercial management, businesses will benefit from the services of a “team” and have access to the varied knowledge and experience that team can bring in a flexible way.
A business could engage the services of a solicitor (again calling for support at the 11th hour), but going down this route does not always provide a business with specialised contract support which ensure business needs (legal, technical AND operational) are properly addressed. You’ll need to spend time bringing them up to speed with your business and potentially a costly option. Outsourced commercial managers have solid legal knowledge AND practical business experience. They take a pragmatic view and place the business at the centre of all contract negotiations.
A better way?
Unlike my ’emergency’ client requiring urgent ad-hoc support, my retained clients ensure I am engaged at the onset of any commercial contracts or negotiations. This allows us to work together to set objectives, raise potential pitfalls, agree a strategy and, most importantly, plan. A colleague once told me there were 3 key things in any successful contract negotiation (1) Planning (2) Planning and (3) yes… you’ve guessed it… Planning! And they were right. With goals set and a clear action plan, the outcome is considerably better. By having close and regular contact with an outsourced commercial resource, on a retained basis, businesses are more likely to use them and get the full value that strong commercial support can bring.
Some key benefits of retained commercial support include:
- Regular assistance with planning and business strategy to maximise business interests.
- Improved commercial awareness across a business through training and workshops, helps conclude more effective contracts quickly, with all employees understanding the importance of good quality contracts.
- Proactive focus on strong processes and tools to protect business value, safeguard profit and improve operations – no gaps to trip you up!
- Helps build businesses on solid foundations, ensuring they will stand up to scrutiny. A particular focus if you have a business exit in mind.
- Regular monthly payments to spread the cost and help with budgeting.
Whatever model you want to adopt, whether it be occasional ad-hoc support or a more hands-on retained commercial support model, it is advisable to engage with your commercial resource at the earliest opportunity. This can, most often, save you time and money in the long run, ensuring the right approach is taken from the onset. No hidden risks and you’re less likely to be bitten on the… arm!
If you would be interested in discussing how Devant could support you on a retained support basis, then please do give us a call – we’d love to hear from you.
Principal Consultant, Devant