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In our previous article, we explained that Contract Lifecycle Management (CLM) and Proposal Software (CPQ) are perfect for each other because both software categories focus on economic work for sales. In this article, we'll take a closer look at and explain the differences between the two solutions.
What is a contract software (CLM) solution?
The scope of services offered by contract software can vary significantly depending on the provider. In many cases, however, contract software is concerned with automating and facilitating the management of a company's contracts from drafting, negotiating and signing to renewing existing contracts.
Contract software is often also integrated into the process of approving and managing contracts.
Ultimately, through extensive automation and better communication, the contract software can lead to significant increases in efficiency and thus cost savings. In addition to greater efficiencies in the contract process, CLM software also helps to better understand legal risks and also to better control them through the use of central templates.
What challenges can be solved by using contract software?
- Acceleration of contract processes in sales through the use of contract templates with automated routines for contract creation
- Arduous negotiations and long word ping pong email chains about the direct negotiation of contracts via the software
- Filing and tedious signature routines using an embedded electronic signature
- Compliance with central requirements by compliance and legal departments through templates for the contract process
- Access and availability of contracts via a central repository
- Long evaluation times of contracts for the transfer of agreed conditions via software interfaces
- Lengthy signature processes caused by contracts that are difficult to penetrate can be quickly resolved using professional layout and embedded explanations
What is a Configure, Price, Quote (CPQ) solution also known as quotation software?
The primary task of CPQ (Configure, Price, Quote) is to create offers for orders quickly and precisely. CPQ systems are often part of CRM software (Customer Relationship Software). However, this upgrade usually costs an additional amount of money.
Although a high percentage of salespeople are well-versed in using spreadsheet programs, the manual entry of price-quantity frameworks is still often a source of error that can disadvantage companies.
For companies with a wide range of products and a complicated pricing strategy, the use of a CPQ system is therefore particularly worthwhile, as prices and products no longer have to be reconciled each time, but are drawn from a central register. This allows offers to be created error-free every time.
The discounting of products and services can also be specified centrally and sales representatives can be prevented from selling products primarily based on price.
What challenges can be solved by using quotation software?
- Error when calculating using a central product and price register
- Illustration of a complex price quantity calculation using clear tables
- Lack of access to and inspection of submitted offers via central storage function
- Preparation of offers usually requires time, which can be saved by using software and the offer always looks professional.
How can the offer and contract software be used in the sales process?
Although CLM and CPQ have a number of their own functions, there are a few features that both solutions incorporate. If both solutions are used in combination, there are a number of additional benefits for companies and customers.
Step 1: Proposal
As soon as you have reached the step in the process where you should make an offer to the interested company, a CPQ system is useful for preparing offers. As mentioned, the advantages include the consistent implementation of internal pricing policy and an attractive design in accordance with the corporate design.
Step 2: Accepting and Negotiating the Offer
After the offer has been sent, the offer is usually accepted or, if the offer does not meet the requirements, the offer is negotiated. This is often currently done via e-mail. CPQ systems are currently not yet designed to negotiate offers.
Step 3: Contract preparation
Once you have agreed on the conditions, they are often set out in a contract. In addition to the terms of the offer, data protection regulations as well as user agreements, as well as limitations of liability are therefore often included.
Step 4: Approval
Should the contract deviate from the previously approved standard, a further compliance loop is necessary. With a CLM system, this can be done directly via the software. top.legal offers the option of approving deviations directly on the respective templates themselves.
Step 5: Negotiate the contract
Once the draft contract is approved, it can be sent to the affected party or customer for contract negotiation. With the help of the CLM, the parties involved can be invited to review and critically review the contract in any order. Changes to the contract are immediately identified as changes in the contract. A further exchange of contracts via a series of emails is no longer necessary.
Step 6: Signature
As soon as the contract has been finalized, the documents are usually also signed using the CLM tool. CPQ systems also offer this option. This allows buyers to sign electronically directly on the document as a sign of consent. The signature is often an advanced electronic signature and is legally valid for 90% of contracts in B2B sales. CLM systems also store the negotiation history, which provides additional security in court.
Step 7: Contract filing and post-sales
After each completed process, the created and signed documents are stored and managed in the respective software. It is now common practice to store contracts redundantly multiple times in independent data centers. This is also the case with top.legal. In addition to administration, good CLM systems also offer the option of extracting and analyzing the data contained in contracts. Reminders of deadlines can often be set in both types of software so that important dates are not lost sight of.
