Which Contracts Actually Matter?
Written By: Aryeh Da Costa
Introduction
Most SMEs don’t struggle because they have “too many” contracts.
They struggle because they treat all contracts equally – even though most contracts have little impact, and a small handful determine:
- Cost
- Risk
- Service stability
- Supplier dependency
- Cash flow
- Customer outcomes
CIPS recommends that organisations apply Pareto principles to supplier and contract management because 20% of suppliers typically make up 80% of total spend.
This means:
Not all contracts matter.
But some matter a lot.
Why SMEs fall into the “equal attention trap”
SMEs often have:
- Limited admin capacity
- Fast-moving priorities
- No formal contract owner
- No segmentation of contract importance
So they end up giving the same level of attention to:
- A small office services contract
- A major supplier agreement
- A low-value SaaS subscription
- A revenue-critical customer contract
In reality, these contracts carry vastly different impacts.
The three types of contracts that matter most
High-value supplier contracts
These influence:
- Cost of goods
- Service continuity
- Operational stability
- Vendor dependency
- Working capital
Revenue-Generating Customer Agreements
These determine:
- Cash flow
- Revenue predictability
- Renewal cycles
- Client performance obligations
Contracts with renewal or termination risk
These carry the highest chance of “value leakage.”
These are the agreements SMEs should elevate, track closely, and treat as priority.
The Framework SMEs Use to Prioritise Effectively
Step 1 – Categorise all contracts by value and risk
Value = cost or revenue impact
Risk = operational or compliance exposure
Step 2 – Identify top 20% by spend or revenue
Using the CIPS Pareto guidance.
Step 3 – Flag contracts with upcoming renewals
These require immediate attention.
Step 4 – Assign ownership
Every priority contract needs a clearly responsible person.
Step 5 – Automate alerts on these contracts first
Simple, predictable, actionable.
Why Prioritisation Changes Everything
When SMEs stop treating all contracts equally:
- The important contracts get proper oversight
- Renewal and pricing decisions improve
- Risk reduces instantly
- Less time is wasted on low-value agreements
- The team becomes proactive rather than reactive
You don’t need to overhaul contract management.
You just need to focus on what matters most.
Conclusion
SMEs often feel overwhelmed by the number of contracts they manage, but the real challenge is not volume. It is prioritisation. When businesses identify the agreements that drive the greatest financial and operational impact, they can focus their time and oversight where it matters most. By categorising contracts by value and risk, highlighting the top spend or revenue agreements, and ensuring clear ownership with automated alerts, SMEs create a more focused and effective contract management approach. Instead of spreading attention thinly across every document, teams concentrate on the agreements that truly influence business performance.