What is Contract Management
Contract management can be defined as the process othat involves, intiation, drafting, negotation, exceution, managing oblgations, auditing and reporting and renewal, to optimise operational and financial performance at a business, while mitigating risks proactively to prevent reputational and financial losses.
It’s no secret that lawyers can be control freaks, but one area that seems to consistently slip through their fingers is contract management.
If you feel as though you lack control of contract management processes in your business you are not alone. Whether it’s due to a lack of planning or information overload, many legal departments struggle to gain visibility over contracting. As a result, inefficiencies translate into delayed decision-making, misunderstanding of peoples’ responsibilities, and missed opportunities to improve performance.
One of the key goals of contract management is to obtain the services that were agreed upon and achieve value for money. To deliver on this, Legal needs to be able to define and streamline processes, improve the quality of contracts and mitigate risks.
Successful contract management processes guarantees Legal is in control of your legal risks, by doing the following:
Contract Creation
- Define the different types of contracts required across your business, from customers, insurance contracts and business vendors.
- Empower the business to work with document assembly tools that can be used to create “ready to sign” contracts. This will increase the legal department’s efficiency and improve compliance and give you more time to focus on non-standard contracts that need your review.
- Establish and follow policies for when you should review your contract templates and term libraries. This decreases the likelihood of missing legal amendments that require changes to be made.
Collaboration & Negotiation
- Define a workflow for each type of contract, so that participants understand their role and the current status of contracts. Workflows can help identify unnecessary procedures, and cause the organization to closely examine the goal of the task, who is responsible, and how long it takes. By automating standard tasks, management can concentrate on their strategic business priorities.
- Use e-signatures. Most organisations measure the time it takes to get a contract signed in days or weeks, but organisations that use e-signatures can collect a signature in minutes. Any reputable e-signature vendor will ensure that signatures are legally binding and provide a full audit log of every action that occurred during the signing process.
- Track the party that is responsible for each contract. This reduces the chance that somebody who has no authority approves something. Furthermore, everybody is aware of precisely which contracts they are responsible for.
Contract Execution
- Store all contracts in a single digital platform. Not only does this eliminate paper-based processes (which cost you time and money), but when all of your contract data is searchable, you can quickly find whatever you are looking for.
- Set up alerts for due dates. No organisation wants to suffer the consequences of missing a deadline or failing to pay.
- Create reports to monitor performance and mitigate risk. When your key contract information is searchable, you can extract crucial information to ensure that obligations are being fulfilled.
Takeaways
By having clearly defined contract management principles and taking stock of how your business manages contracts at each stage of the contract lifecycle, you can identify where technology can help you drive structure processes, increase efficiency and mitigate risks in due time. Not only can you ensure that contracts perform as intended, but you can also proactively protect the business and elevate the level of service Legal provides to the business. The result: Legal is 100% in control.
