Accelerate Revenue Recognition with Faster Contracting

Every day a contract sits in redline is another day that revenue isn't recognized.

In general, revenue doesn't hit your books until a contract is executed and the goods are delivered or services are performed.* It doesn't matter how good the sales call went, how close the deal is, or how confident your sales rep is that it's a done deal.

Your revenue figures are being shaped by how quickly you can execute and perform under your customer agreements.  While it may be difficult to speed up performance, many companies can shorten the contract execution timeline. If contracts are executed faster, performance can start earlier and revenue can be recognized sooner.

Compress the contract cycle, and you compress the gap between "done deal" and recognized revenue. Contracting speed matters.

What Kills Contracting Speed

If contracting speed matters, why are so many companies still so slow?   From what we’ve seen, most contract delays aren't caused by the inherent complexity of terms. They're caused by not having a scalable, accountable contracting system.

No playbooks. When attorneys don't have codified positions, every negotiation starts from scratch and takes longer. When legal has to figure out your company's standard position on common issues  for each deal rather than referencing a contract playbook with preapproved positions,  days are added to every negotiation without any added value.

No SLAs. Legal is often the only business function that operates without a defined turnaround commitment. Without legal SLAs, contracts often sit idle longer than necessary.

No ownership. In companies without a dedicated contracting resource, agreements are reviewed by various stakeholders and/or external counsel, but nobody “owns” the process and is accountable for it.  Without structure and accountability, it is tough to produce consistent, fast results.

No repository. Without a managed contract repository, follow-up deals with existing customers are delayed because no one can easily find the existing executed agreement.  Contracts that aren't properly stored aren't just an operational inconvenience; they're a drag on every subsequent deal touching the same counterparty.

No fit. Not many lawyers solely focus their practice on customer and vendor agreements, so companies often end up using attorneys with other backgrounds. Those attorneys may be able to navigate the agreement, but their effectiveness and speed is often lacking.   

Legal As A Growth Lever, Not A Bottleneck

Each of the issues above has a solution, and  companies that solve them see materially different outcomes. Contracts are negotiated consistently, tactfully, and quickly. Those companies drastically shorten the timeline to contract execution, which accelerates revenue recognition and helps improve the value of the overall business.

This isn’t theory – we help clients do it every day.

See how GTX Legal builds and operates high-performance contract engines that helps accelerate revenue recognition with faster contracting → Why GTX

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*Assuming you’re a larger company using accrual based accounting.