When closing a deal with suppliers, many managers only stick to the verbal agreement — until something unexpected happens and neither party knows what to do.
This is because, for a long time, businesses have paid little attention to corporate contract management.
This is a big problem, as there is no business that is risk-free. Although this is a fact, it is possible to minimize the risk of losses while maximizing the possibilities of gain.
And it is in this scenario that we see in practice the advantages of having a corporate contract. Having legal support is extremely necessary, as it protects both businesses — both yours and your supplier's. A well-drafted contract defines the object of the negotiation and the best terms of the agreement, in addition to ensuring that it is in accordance with the law and protected against nullities.
In other words: having a corporate contract with your suppliers allows for much more effective preventive work.
In the following text, we will delve deeper into this subject. You will understand what a corporate contract is and what advantages it can bring to your business.
What is a corporate contract?
According to the International Association of Contract and Commercial Management (IACCM), entrepreneurs lose an estimated 9.2% of revenue every year due to poor contract management, lack of oversight, and lack of visibility.
With this in mind, it is easy to understand why having a corporate contract is so necessary these days. Business owners in all sectors have already understood that choosing a good supplier is not enough: establishing control mechanisms is essential to fully execute the contracts linked to them.
In general terms, a corporate contract is an instrument that regulates a commercial relationship, establishing the rules for a specific negotiation. This document ensures that your company will receive exactly the product or service contracted — to achieve this, everything must be specified.
For example, in the case of products, make clear the brands, models, sizes and quantity. If it is a service, the frequency, type of work and number of employees are mandatory information.
What are the advantages of having a corporate contract with your suppliers?
Without a doubt, the main benefit of having a corporate contract is the minimization of litigation damages. After all, legal expenses are usually high, even in the event of a victory. A situation like this could easily be avoided with a well-drafted corporate contract.
However, it is important to emphasize that no business activity is subject to risks. Although preventive work does not prevent adversities, it helps to anticipate possible crises and to work out in advance what the best solutions are for the company. Therefore, consult your legal department to find out what alternatives are available within the corporate contract.
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