Contract management is essential for every business. It is a formal process for the parties entering a contractual relationship. An efficient management process builds a company’s reputation. Thus, every company should always try to enhance their contract management process.
What is Successful Contract Management?
A successful contract management procedure will fill the gap between intention and execution and will involve the following steps:
- Keeping a check on contract generation.
- Executing the contract.
- Examining to reduce risk and boosting operations and financial efficiency.
What are the Strategies for a Strong Contract Management?
It is important to understand that contract management may vary for every organisation. However, following a specific guideline to enhance it for your organisation is extremely crucial to maintaining seamless and optimised outcomes.
1. Background Check:
A background check is mandatory before entering into any kind of contractual agreement. It is important to ensure that the party is eligible to enter into a legal liaison.
2. Set Up Authorisation:
It is vital to have a meeting so that all parties have an idea of who the authority personnel is. This in turn clears the air about whom to contact for making final decisions, avoid misunderstandings, and ensure that contractual obligations are fulfilled. Contracts contain sensitive and confidential information, thus everybody should not have access to them.
3. Accountability:
A contractual agreement may involve two or more stakeholders. To receive the desired outcomes, it is important to drive accountability among employees. This helps align teams and attain the desired outcomes. Defining roles and responsibilities and effective communication can aid in achieving this.
4. Scope Statement:
A scope statement is a transparent description of the task that must be done and establishes a clear understanding among all parties. When a scope statement lacks precision it will result in delays and disagreements compromising the company’s budget and projections. Thus, having a strong scope statement is crucial.
5. Set Up Contract Lifecycle:
Create and set reminders of contract expiration or auto-renewal dates. The reminders will ensure there is time to re-evaluate, negotiate, or terminate the contract as you deem fit in that situation. This is easy to achieve by adding dates on the calendar or setting up phone alarms.
6. Centralised Storage Space:
One of the most efficient ways to improve an organisation’s contract management process is by centralising the storage space of contracts on an online platform. This will not only reduce the risk of hacking but will also save time by eliminating clueless search for a contract.
7. Streamline Review Process:
It often happens that clients request or even pressurise for accelerated deliveries, so, ensure you allocate enough time to draft, review, discuss and revise and complete the agreement. It is essential to agree on the review period length during the initial meetings. Also, ensure that parties are liable for routine revision as additional review will affect the entire delivery process.
8. Automate Management Process:
The best way to achieve this is by utilising AI software. While manual processes are tedious and are prone to errors; automated processes involving AI initiate, authorise, approve, execute, comply, renew, and prompt the right action at the right time saving time and chances of error.
9. Consequences of Delays:
In case of delay or if a contract falls apart, the company may incur loss or require additional man-hours. Therefore, all parties must be aware of the consequences of delay on the company. Specific clauses should be included providing details about requests for changes.
10. Review and Evaluate:
Never move on to the next project immediately after completing and documenting one contract. In fact, spend time evaluating by scheduling an internal meeting to understand the pain points, to determine its cause, and to assess its measures. This process saves time in the future in similar situations.
To summarise, it is important to ensure that organisations track and monitor contracts to eliminate the chances of anomalies, maintain deadlines, and optimise project performance. Not attending to these details and inefficiency in this procedure might lead to business loss, which is undesirable and may even hamper the company’s reputation.
Also Read: Integrating Contract Management Systems with Other Business Tools
