How to Build a Customer Contract Register

Golden Section believes it is best practice to create a master contract (see play: Contract Playbook) and then a contract register to track contract dates, highlights and any deviations from the master contract. Creating a contract register gives you a dashboard that you can quickly reference, use to improve your billing, collection and renewal processes, and assist you at your next capital event.

The contract register will be vital when exiting. Buyers want to know what they are buying. And for a software company, they are principally buying contracts. Hence, they need an efficient way to understand each contract. If you are doing $10M in sales with 1,250 different companies, it will be administratively impossible to read every contract. But, nonetheless, this is what is needed. Therefore, keeping (grammatical, visual, etc.) increases buyer faith in your representations and will ultimately lead to a faster and more lucrative exit.

The impact: A contract register adds transparency into the black box of contracts. It gives you quick insight into contracts approaching the end of their terms so you can proactively manage renewals, escalations and billings, improving your overall cash flow. Additionally, a contract register is a document any future investor will want to see.

Again, your contracts comprise the enterprise value of your company, and so a potential investor or buyer will want to see the contracts they are purchasing.

The goal: Design a contract register to track all customer contracts and their key terms. We believe this should be the cleanest document your company possesses, with no misspellings or unique fonts.

How can Golden Section Assist?

Steps

1. Assign version codes to the existing contract templates your company has used.
2. Assign existing contracts to the appropriate version code.
3. Enter relevant information into the template provided.
   • Regarding Key Differences, summarize in bullet-point summary key deviations in this particular contract from its template. For example, if this contract has a maximum annual escalation of 5% instead of the 7% written in the contract template, write "edit: maximum 5% annual escalation."
   • A note on neatness and accuracy: This is not simply an internal reference document. It will be used in the future by potential buyers/investors to analyze the value of your company. You want to keep this document as clean and accurate as possible. You do not want to raise any red flags or give a buyer any opportunity to lower your valuation.

Codification: Save this document to its own folder. In this folder also save any versions of the contract templates and executed contracts. Continue adding to this document and saving contracts as they are executed.