November 27, 2019
Small companies can suffer growing pains as they become successful and expand. They may start out with a single location, a few products, and a few paper contracts and leases. As they grow, they may have multiple locations, more and different contracts and leases with widely varying terms , renewal dates, escalation clauses. Moreover, these records may be managed by different people and spread out over several distant locales. Ensuring that those paper records are kept up to date can be very difficult. But that is essential to the business’ success.
One such company was a small communications company with operations in more than 10 states. It had acquired various properties and leased space in numerous builds to locate its communications equipment and its office personnel.
It had more than 1,000 contracts and leases.
The company found it increasingly difficult to ensure it was complying with the terms of those agreements. Moreover, it was having difficulty doing its annual budget because it was impacted by escalation clauses, renewal dates and other factors. Doing this annually from paper records was time consuming, costly and often inaccurate. Large firms have long ago abandoned this archaic system, but may smaller firms find it too difficult to change on their own.
We had the experience to help this client in a timely and cost-effective manner. We assembled a team to 1) review and update all the agreements, 2) move them to a centralized location to ensure constant and accurate updating, 3) identify key provisions of the contracts (e.g., escalation clauses, renewal dates), 4) devise a tracking system to ensure compliance with various terms of those agreements, and 5) develop a management a tool to facilitate the annual identification of items that would impact that company’s next financial year. This lowered costs and protected revenues for the firm.