Your Contracts Could Be Limiting Your Revenue Potential and Increasing Risk in Your Business. Here's How to Take Control. From managing risk to maximizing revenue, standardized sales contracts are a strategic tool that helps create efficiencies and collaboration between sales and legal departments.
By Jeff Carona Edited by Chelsea Brown
Key Takeaways
- Contracts are risk management and revenue tools. You must know what's in the contract and ensure the whole organization knows it, too.
- Cross-team visibility will help prevent pitfalls. It's important to ensure the contract is visible and actionable across departments.
- Technology enables contract lifecycle management and streamlines contract creation, negotiation, approval and execution.
- Create incentives for legal-sales collaboration to turn contract compliance into a shared goal. Your legal team should also equip your sales team with the right language and tools to handle tough conversations.
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For growing companies, especially those navigating long-term service contracts, standardized sales contracts are more than paperwork ... they're a strategic tool for managing risk and maximizing revenue. Yet many organizations still suffer from costly inconsistencies, miscommunication between teams and untracked contract terms that result in lost income and avoidable legal exposure.
Gone are the days of contracts scribbled on napkins. Modern contract management relies on formal processes and documentation.
Here are some insights for a proactive approach to contract standardization, starting with bridging the gap between the sales and legal teams.
Related: 5 Simple, Proven Ways to Improve Contract Management
1. Contracts are risk management and revenue tools
At their core, contracts are commitments. That means they're just as much about risk management as they are about revenue generation.
If your sales team over-promises — perhaps offering more services than your team can deliver or ignoring necessary protections like indemnification clauses — they could expose your business to legal liability or reputational harm. On the revenue side, failing to include pricing escalators in multi-year contracts or not tracking tiered pricing models accurately can leave serious money on the table.
In my experience, a contract without proper safeguards and missing price escalators is a legal minefield fraught with exposure for an entire organization from sales to legal operations.
Key takeaway: You must know what's in the contract and ensure the whole organization knows it, too.
2. Cross-team visibility prevents pitfalls
One of the biggest pain points in many organizations is a lack of inter-departmental communication. The sales team might know a contract was signed, but legal, finance or operations may not understand the terms the sales team and client agreed to.
Without standardized language and a clear handoff process, your business risks:
Missed automatic price increases
Non-compliance with service level agreements
Poor customer experience due to internal misalignment
Best practice: Make the contract visible and actionable across departments, not just sales and legal, but also finance, customer success and operations.
3. Technology enables contract lifecycle management (CLM)
Platforms like Salesforce, when integrated with CLM tools, can streamline contract creation, negotiation, approval and execution. With the right setup:
Salespeople can pull up the most up-to-date, approved templates
Any clause edits or exceptions trigger automatic notifications to legal for review and approval
Clause libraries ensure that common provisions, like indemnification, are standardized
Legal doesn't need to review every deal from scratch
This reduces friction for sales reps eager to close a deal while ensuring legal safeguards for the organization at large remain intact.
Related: 6 Mistakes to Avoid When Creating Client Contracts
4. Create incentives for legal-sales collaboration
Salespeople's primary function within an organization is to generate revenue and drive business growth, but that shouldn't come at the expense of your company's legal position. By incentivizing collaboration with legal, you can turn contract compliance into a shared goal.
Ideas to consider:
Tie part of commissions to contract accuracy and compliance with certain legal mandates.
Provide legal-approved "talking points" to the sales team to address clients' questions or attempts to negotiate key provisions. Offer training so the salesperson or team understands the rationale behind key clauses (e.g., indemnification from all but gross negligence)
Ensure accessibility of legal team to provide timely support to sales team.
This builds a culture of shared accountability, rather than bottlenecks or blame.
5. Give your team the right language
Legal teams can empower sales by equipping them with scripts and tools to handle tough conversations. For example, if a client's attorney wants to revise an indemnity clause, sales should be prepared with:
A clear explanation of why the clause exists
A summary of what flexibility, if any, is allowed
Guidance on when to escalate to legal
Idea: Require your legal department to create standardized messaging for sales reps so they can confidently represent the organization's position without overstepping.
Related: Do You Know Where Your Contracts Are
Standardizing contracts isn't just about reducing paperwork; it's about creating sustainable growth. When contracts are uniform, enforceable and visible across your organization, you're better positioned to avoid risk, capture full revenue and scale smoothly.
If you're still relying on ad hoc contract editing and siloed communication, it's time to rethink the process. The return on investment for collaboration between sales and legal isn't just compliance; it's peace of mind and profit.
