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Whether you’re a business owner or an entrepreneur, having the proper legal documentation in place is essential. This guide will walk through how to prepare your own sales contract with tips and advice on what to include.
One of the most crucial elements in the sales process is the preparation of a sales contract. It entails ensuring that the customer’s demands are properly defined, that a solution is agreed upon, that conditions are established, and that any unresolved concerns are addressed. It makes all the difference in completing the purchase and developing a successful client connection if you do it correctly.
1. Identify the customer’s requirements
A sales contract is an agreement between you and your client to provide a product or service. As a result, it’s critical to make sure you understand precisely what your consumer requires before drafting a sales contract. This normally occurs throughout the sales process, but you should not attempt to draft a formal agreement without first determining precisely what your client requires.
Before writing the sales contract, sales managers should ensure that they have answered all of the following questions to ensure that nothing is left out:
- What is your customer’s most pressing requirement right now?
- What is the budget of your customer?
- Have any of the main decision-makers voiced any reservations?
- Do your goods meet the requirements and problems of your customers?
2. Come to an agreement on a solution
Your role as a salesman is to provide solutions that ease your customer’s pain point. You should agree with them on the greatest solution that matches their individual circumstances once you’ve heard their requirements. That includes matching your company’s goods and services with your customers’ best interests. The finest solutions are those that directly solve your customer’s requirements rather than merely attempting to close a deal.
In fact, it’s worth your time to double-check that you and your consumer are on the same page. While it may seem counterintuitive to bring up a disadvantage, now is the time to make sure that the client is aware of any disadvantages or responsibilities that the solutions may entail. This may save you a lot of time and aggravation later on when these issues eventually arise.
3. Agree on Terms
There are a few crucial aspects to clarify now that you and your client have decided on the solution that makes the most sense for their requirements. These are, in fact, the most crucial aspects since they describe how you’ll work to accomplish the answer you promised. The main focus of this stage is on setting and managing expectations. You’ll want to spell out precisely what you’ll supply, how much the consumer will pay, and when you’ll provide it.
The following are the three most crucial terms in a sales contract:
Deliverables
The precise goods you will give for your client are known as deliverables. This might be in the form of things, such as a new HVAC system, or services, such as a new website. A lot of the time, it’ll be a mix of the two. For example, if you’re building a new HVAC system, the components of the system, as well as the labor needed in the installation, are both deliverables.
If you run a service-based firm, determining precisely what will be supplied is critical. If you’re assisting a small company with a marketing campaign, for example, it’s vital to spell out precisely what you’ll be doing and what the end outcomes will be in unambiguous terms. This will clear up any ambiguity and lessen the chances of subsequent difficulties arising from a misunderstanding.
Payment Conditions
Not only should you figure out how much a client will pay you under a sales contract, but you should also set out the specifics. Will they, for example, pay you in full upfront or give you a deposit and then the remainder over time? The way you receive money depends on a variety of things, but the most essential thing is to put it in writing and agree on the conditions with your consumer.
Timelines
A timetable may sometimes be as basic as determining when you will deliver a product. There may be stages involved in the process of different forms of sales. You and your client should discuss these stages and come up with a mutually agreeable timeframe together. If you’re constructing a website, for example, you may set up milestones where you can examine your work and get your customer’s approval.
4. Submit a Proposal for Evaluation
Before submitting a formal contract or sales agreement, I propose putting the conditions and solutions you’ve discussed into a sales proposal. This allows both parties the chance to double-check that they understand the expectations, deliverables, timescale, and expenses connected with the transaction. Another benefit of a sales proposal is that it is less costly to make modifications at this stage since it is not meant to be a legal document.
This is particularly true if you’re selling complicated items or long-term service contracts. If you’re a marketing firm working on a monthly marketing services contract, for example, a proposal may assist you clarify the specifics before consulting an attorney who can help you record those facts in a contract.
5. Give yourself time to revise
Establish a deadline for your client to assess the proposal after you’ve finished it to ensure it matches their demands and your agreed-upon answers. By establishing this review time in advance, you can make it a point to check in and ensure that no concerns have arisen, ensuring that the process continues to move ahead. The most essential thing is to be clear about when you plan to move on to the next phase in the process.
6. Make use of a contract template for sales.
Because a sales contract is a legal document, it’s better to utilize a pre-made template that you can fill in with pertinent information. Even the most sophisticated real estate transactions are basically form contracts since the legal text seldom changes—only the precise circumstances. When you use a template, you can just fill in the information that pertains to your consumer.
To help you get started, we’ve supplied a template. This sales contract template includes the elements you should include, but it is not intended to replace a legal agreement. Once you’ve finished this template for your personal use, be sure to get it reviewed by an attorney for your company.
This template is not legal advice, and we are not giving it in the capacity of an attorney.
7. Submit Electronic Signatures Contract
While a paper copy of a contract may be suitable in certain circumstances, it is more common to utilize an electronic contract and record digital signatures. This has a number of advantages, the most important of which is that it makes it easy to submit contracts to clients that aren’t local, and it’s far faster than mailing contracts back and forth. Digital contracts are totally enforceable and considerably simpler to keep and administer than traditional paper contracts.
Pro tip: Using electronic signature software like DocuSign makes submitting a contract for signatures, as well as managing and storing them, a breeze. DocuSign is also free for signers, so you may use it even if your customers haven’t joined up yet. The cost of a paid subscription begins at $10 per month. For additional information, go to DocuSign.
Additional Considerations
There are a few recommended practices to consider in addition to the processes to write a sales contract. These will assist you in ensuring that every sales contract you sign is legally binding and fits both your company’s and customer’s demands. They also assist in making the process simpler and more controllable as your company expands.
When drafting a sales contract, keep the following three best practices in mind:
Seek advice.
It’s difficult to exaggerate how critical it is to have a professional review any sales contract you want to use with clients. Having an attorney evaluate your contract before you sign it may save you a lot of time and money in the long run. While this will add to your costs, paying for legal counsel upfront is far preferable to paying someone later to help you enforce a contract or defend you if something goes wrong.
Pro tip: While every company should have contact with an attorney who specializes in small business difficulties, you should at least check out a service like RocketLawyer before sending your next sales contract. You can construct a sales contract that has been authorized by a real attorney using RocketLawyer.
Save time by agreeing ahead of time.
While signing a deal is perhaps the most thrilling aspect of a salesperson’s work, you shouldn’t hurry it. Take the time to perform the legwork ahead of time so that when you’re ready to present a contract to a client, you can be certain that it will fulfill his or her expectations. While it’s usual for major contracts to have some back-and-forth talks over minor matters, you should have previously agreed on the big picture aspects.
System for Document Management
You’ll want to make sure you have a system in place to maintain track of critical papers after you’ve signed a contract. This is particularly true if you are working on many sales contracts at the same time. It’s convenient to keep all of your contracts in one location if you ever need to examine or enforce one. If you utilize hardcopy contracts, for example, you’ll need a file system that puts all of the necessary material in one place and makes it simple to discover.
If you use electronic contracts, however, a program like DocuSign makes it simple to locate and evaluate your current and previous contracts. DocuSign enables you to upload documents and submit them for signing; it also lets both parties get a copy of the contract and saves it in the cloud. DocuSign is available for $10 per month.
Most Commonly Asked Questions (FAQs)
What is the difference between a sales contract & a sales agreement?
They are, for the most part, identical. A contract is essentially a written agreement between two parties that specifies the product or work that one party will give and the price that the other party will pay. Because “agreement” sounds less formal, the phrases are often interchanged.
A sales contract should be signed by whom?
A sales contract should usually be signed only by someone who is authorized to engage into a formal agreement on behalf of a company. The decision-maker is usually authorized to sign, but if they aren’t, be sure to factor in the time it takes to have a contract signed into your procedure.
Is an attorney really required for a sales contract?
Yes. If your company is just getting started, you may be tempted to save money by doing it yourself instead of hiring an attorney. While this may seem to be a beneficial thing in the near term, if your sales contract is improperly structured or is challenged in court, you can quickly find yourself in much deeper trouble. Even if your company doesn’t have an attorney on retainer, a service like RocketLawyer is worth considering.
Conclusion
Preparing a sales contract may appear daunting at first, but following these seven steps will assist you and your customer in reaching an agreement on the important details. We’ve also included a sales contract template that you can use to get started creating a form that’s right for your company and clients.
It doesn’t have to be difficult to guide your consumers through the process of signing a sales contract. Salesforce Essentials, a customer relationship management (CRM) application, will assist you in tracking your transaction through each step as well as maintaining critical documents such as bids and contracts.
