What is Contract Management?

In contract management, contracts are managed between companies, vendors, or employees. Contract managers document and negotiate terms and conditions as well as any amendments that reveal themselves during the execution or implementation of a contract. It is its responsibility to ensure that all parties to a contract are accountable for their responsibilities, which helps prevent financial losses and legal disputes. The contract management process aims to boost financial performance and minimize risk by systematically managing contract creation, execution, and analysis. 

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Establish Contract Compliance

Clearly identifying who has the authority to make final decisions is essential for all parties. There may not be a need for a senior manager or board member to attend every meeting. However, it should be clear to the meeting participants who can act on their behalf. In order to avoid potential misunderstandings and expedite review processes, the review channel needs to be clearly defined. Make it clear when the approving officer needs to answer specific questions before contracts can be signed. By doing so, representatives will be aware of the situation and will be able to assist in gathering information. It is common for contracts to contain obligations. All of these obligations need to be tracked, including audits, reports, price increases, and payments. You can minimize financial loss by keeping your team informed of critical contract dates. Throughout the entire lifecycle of a contract, compliance with the contract is crucial. Regulations, legal requirements, and corporate guidelines may differ based on the industry. Standardize your contract compliance procedures to ensure this important step is not overlooked in the contract management process. Financial loss and other risks may result if any of these elements are missed. 

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Agree on Process of Collaboration

Establish mutually agreed upon timeframes for review during the kickoff meeting. Ensure that parties are held accountable for timely revisions and indicate how additional review time will affect upcoming processes in the contract management process. You should have these agreements in writing. The contract management process is often a collaborative effort between several departments, including sales, procurement, and legal departments. Collaboration is essential to successful contract management, since so many stakeholders are involved. You can ensure effective collaboration by making sure all parties have access to the latest version of a contract at all times, allowing stakeholders to make updates in real-time. This facilitates better insight into what revisions have been made, when they were made, and why they were made by each stakeholder. It is also possible to set reminders for reviews, so that no one misses the opportunity to send their feedback. 

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Utilizing Templates for Efficiency 

During the contract management lifecycle, it's essential to standardize as much as possible. As a result, your job will be easier, you will spend less time on each contract, and errors will be reduced. During the stages of negotiation, approval, and conclusion, there are some stages that will be very similar across all contracts. Standard contracts can be used to provide basic company information, or to include regulatory and legal requirements specific to your company. Even though templates can be beneficial, rigid standards can sometimes be problematic. Depending on the contract, you might need more specialized information that takes longer to assemble or different formatting than your normal contract templates. 

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Conduct a Background Check

Verify the legal background of the other party before agreeing to anything or signing anything during the contract management process. There is nothing wrong with giving everyone the benefit of the doubt, but it's vital to establish that the party is indeed legally able to enter into an agreement. Identify how a new agreement will affect existing relationships and obligations, if any.

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Institute Repercussions of Delays

You may have to incur extra costs or use extra manpower if a contract falls apart or suffers delays. Consequently, your projections and budgets will be compromised, as well as other opportunities for growing your business during the contract management process. You should inform your counterpart of the consequences of delays for your business. It is especially important to include specific clauses in your scope statement that detail how to handle change requests. It is important to understand what a change request can be, how it is processed, and how it will affect the existing schedule. Clearly indicate in your scope statement what would qualify as a new project.