Contracts and agreements have been a part of the sales process
since time began. Often when we sell something, we also make an
agreement to provide a certain product or service in a special way.
We might agree to provide a certain level of service, customized
paperwork or individualized patient training that is decided upon
prior to the agreement's being finalized. While it may be easy to
sell a product, it is way more complicated and painstaking to
create an acceptable and workable contract.
Remember, not all agreements are set in writing, nor are they
formalized with signatures or with the aid of an attorney (although
I would recommend one). They are often sealed by only a handshake,
a nod of the head or a few short sentences that refer to one person
or company promising something to another.
But if we are going to become expert salespeople, then we must
understand the basic concepts of a contract or agreement,
regardless of the form in which it is created or delivered.
Following is a snapshot of several contract elements you and your
sales staff should be aware of as you consider contract options
with your clients or referral sources.
Who will write the contract?
Experience has taught me that the person who writes the contract
is often the one takes the lead in protecting his own interests.
Make all attempts to write the contract as a team, and ensure that
each element of the contract is discussed before it reaches the
final draft.
Are you looking at a boilerplate contract?
If you are looking at a standard contract used in previous
negotiations, be careful. Even though you or the referral source
may have used this contact successfully before, new times and a new
age may require a total redo of the key elements.
For example, your staffing might be different or the territory
for providing service may have expanded. You now could be buying
products from different manufacturers than those used in a previous
contract. Product pricing might have changed and so might your
fixed business expenses. While you may want to use the framework
from a former contract, never believe that it will be of value more
than once.
What services and products are included in the
contract?
Make sure you know what is expected of you. Will you be required
to carry certain products, provide deliveries on the weekends,
offer an ostomy nurse for consultation, etc.? If you are being
asked to provide services and products you do not offer, will that
be financially possible within the confines of your present
operation? If you do add products or services, are you aware of the
cost and profits you will incur — and can you afford to do
more and make less?
How frequently will parties named in the agreement meet
to evaluate and monitor the success of the contract?
Regularly scheduled meetings for all parties involved in the
contract should be planned and scheduled at the onset of the
negotiation. Some companies that I have worked with found short
weekly meetings allowed them to catch problems before they became
negative patterns of behavior. Others found that a monthly meeting
and weekly conference calls were enough to handle problems before
they became costly errors.
What products and services have been carved out of the
contract?
Too often, contracts have focused solely on what a home care
company is going to do, what the referral source is going to
provide and how they will work together — with no clear
notation of what will not be included. If there is any chance for
disagreement about what services, particular products or
documentation is not going to be offered, now is the time to place
that in writing. If you will provide certain products or services
at an additional fee, this should be noted as well.
A comprehensive contract, including an outline of all you will
do and not do, should serve you well, especially a week in when you
are being asked why you didn't do something that was supposedly
expected of you. The written agreement becomes a clear and
easy-to-access reminder of what has been promised by both
parties.
Who will do the billing for the products/services
offered, and when will the appropriate party be paid?
If there is a billing issue outlined in the contract, you are
now working on a serious issue: money. Parties want to know who
will do the billing, when the bills will be processed and, even
more important, "When will I get paid?"
Make sure there is a clear understanding about how all the money
is going to be collected and the expected timeline for payment.
Unclear arrangements about how money is going to be collected and
distributed can make for strained relationships. While people may
love your company, your products or the referral source, if there
is not cooperation in collecting the required documentation or in
making payments to the appropriate party in a timely manner, the
death of the contract could be eminent.
Is there a termination clause within the
contract?
If the sales contract is not working for either party, how long
and how complicated will it be to cancel the agreement? Do you need
to send a certified letter 30, 60 or 90 days prior to termination
notifying your partners? What will happen to the patients you are
presently caring for? There are many details to cover, and it will
be important to allow both parties sufficient time to handle all
the issues related to severing an agreement and possibly moving on
with other partners.
Some contracts fail not because of financial issues or the wrong
numbers provided in developing the pro forma but simply due to a
clash of personalities or business goals and missions. The roots of
a poor contract can be complex and often unclear, but what is
visually clear to all parties is that it's not going to work.
At the end of the contact determine:
- Whether all parties would do it again?
- Whether the contract in its present form allows you to make
enough money to make the contact worthwhile? - What changes would be necessary to make the agreement
acceptable to both parties?
In any sales agreement, you will not always receive everything
you wanted. Remember, if the agreement is not a good fit for your
home care company, you can try to negotiate a better arrangement
— but if you must, walk way. I know many companies that
should have walked away from contracts that were negotiated and
signed for the wrong reasons. I could tell you the names of those
companies so you could contact them personally, but they are all no
longer in existence. Please don't add your name to that illustrious
list.
Now that I have played lawyer without a license, take time to
review your next sales contract with a real attorney. To my many
lawyer friends in the health care industry, we may need you now
more than ever. No one can afford to enter into an agreement that
does not offer the expected results.
Read more Sales Notebook
columns.
Louis Feuer is president of Dynamic Seminars
& Consulting Inc. and the founder and director of the
target="_blank">DSC Teleconference Series, a teleconference
training program. You can reach him through
href="http://www.DynamicSeminars.com">www.DynamicSeminars.com
or at 954/435-8182.
