It is commonly considered a formality for the two parties entering a contractual relationship. But, effective procedures for managing contracts are crucial to determine the viability of any business agreement.
As a contract administrator, you’re accountable for drafting the contract and any relevant document. This is only one of the many duties you have. In time, you’ll need to create an action plan so that your contract management procedures are not just documented but also clearly defined.
How to Improve the Management of Contracts?
To enhance contract management, it is necessary to improve the security of contract management and cut down on manual contract management procedures whenever feasible. Three essential improvements are centralizing the contract management in a secure repository for contracts, implementing a workflow for contract management automation, and using the power of contract intelligence. Make use of a futuristic contract lifecycle management software system from contractsafe.com to enhance the management of contracts.
Re-Evaluate Your Process and Establish Goals
There’s a good reason for looking to improve the process of managing contracts. It seems like something isn’t working properly. The first step toward getting it to work is to examine the current program. Write it down in detail to discover what is working and what is not. This will provide insight into how you can and should improve your process.
With all the facts, it’s time to establish specific and quantifiable objectives. Perhaps you want to reduce costs, lower risk, or improve transparency. Understanding why you’d like to transform your current procedure, and the goal you’d like to accomplish are crucial steps to consider before you can effectively revamp your contract management system.
Making a list of your master agreement, service agreements and product schedules, non-disclosure contracts, statement of work for contractors, supplier contracts, and other legal documents may get more complicated, particularly when your business is growing and you’re witnessing an increase in the number of contracts. Unorganized, messy processes can make tracking important dates and vital compliance information
A central hub must manage all of these contracts signed throughout their life cycle so that it is easy to store and access them at any time. Automation is the most important aspect. Making investments in software is an efficient solution to the challenges of managing contracts. It can lead to better organization, less streamlined procedures, less wasted timeless administrative mistakes and duplication, greater efficiency, greater consistency, and a reduction in costs and costs.
Technology will also improve transparency to assess potential contract dangers and issues better before they become a problem. You’ll have a 360-degree overview of all your contracts. This could not be achieved by hand and contracts accumulating dust on the desks of your managers.
Utilizing contract templates with uniform language is a reliable method to ensure consistency and reduce risks while saving time and money by avoiding the law department’s involvement. Contract templates also provide a better understanding of the contractual obligations and less need for multiple negotiations.
Utilizing simpler terminology and less jargon will help make templates more accessible for your department and customers. You must obtain the views and approvals from your legal and HR, business operations, and finance departments to achieve the best results from your templates.
Remember Important Dates
Be on the lookout for important dates like meetings, negotiations as well as dates for contract expiration, and so on. Failure to meet deadlines can result in damaged relationships because of poor management and inattention.
Failure to renew your contract can cause the loss of valuable partners. An exact timeframe before the expiration date is usually when contractors offer discounts or reduced prices. Although ignoring this offer might not significantly impact your company, keeping to deadlines is essential. The mishandling of contracts has resulted in several severe cases of contract breaches previously.
Security of Information and Ensuring Visibility
Your company’s contracts with other parties could contain confidential documents, while others might be available without difficulty. Choose which documents are confidential. Only authorized personnel are allowed access to sensitive documents. Documents that require continuous review by both parties should be stored in a storage area that is accessible so that retrieval is easier.
You might want to consider ensuring that contract documents are secure using the secure storage method with robust access or verification. Nowadays, companies are embracing cloud storage, which can be accessed anywhere and anytime. Contract managers can also upgrade the system to evaluate the importance of each document and its level of security. Each level has a distinct degree of access.
Examine Clauses Regularly
Creating a standardized language and then stopping there isn’t enough in itself. It is essential to do more to ensure that the company is ahead of the curve in contract management. Templates lose value when the language used in them is changed multiple times. So, companies planning to keep increasing their business must review the contract clauses and modify them to accommodate every stage of their business growth.
Create A Plan to Check Your Process Continuously.
Your company will be moving at a rapid pace. It needs to keep ahead of the competition and consolidate its position in the market. What works for contract management today may soon become outdated and unproductive within the next few years.
Designate someone to examine the procedure monthly, quarterly, or annually. Review the achievements you’ve made, discuss any emerging risks or new challenges that have emerged, and make any necessary changes to your contract management process to ensure that you are working towards your goals.
The best strategies to ensure better contract management include conducting a background check of the person who is signing, establishing an individual point of contact to both sides, creating the life cycle of the contract, agreeing on the review process as well as the outcomes for delays and record records of how the process was conducted.