The contract management process involves managing the creation of contracts, their execution, and analysis to increase the efficiency of both financial and operational aspects of a company. There is no way for a business to survive without contracts of any type. Contracts conclude all business agreements. They are the driving force behind the modern business model that contract management is essential to any business process. They also help reduce financial risk.
Contract managers, with the assistance of CLM software like ContraSafe are accountable for the drafting of the contract as well as any other related documents. They must also be knowledgeable about law to manage the process of managing contracts effectively. Being aware of what takes place throughout the process will ensure your contract management processes meet all specifications to produce optimal outcomes. These are the steps that are essential in determining the longevity of any contract.
The Planning Stage
This is among the most critical stages of the management of contracts. It is crucial to design a well-organized method that best suits your company’s requirements and resources in this phase. This will provide an adaptable roadmap that includes procedures covering every type of contract your company has. It will also allow you to assess and define your contract goals. This means you can develop the appropriate management processes to prevent potential pitfalls.
You should also define your needs, determine the most important goals, establish expectations, and identify risks. This will make any decision later on much more straightforward. Because of the legality of contracts, you must be well-prepared so that you have the tools needed to take a contract through the seven steps of managing contracts flawlessly.
Think about the following points when formulating your strategies:
- The kind of contracts your firm regularly collaborates with
- Who is accountable for particular phases of the process?
- What are the issues that have arisen in the past?
- What resources are required to implement the strategy?
After you’ve outlined your contract management procedure, now is the time to start implementing your plan. In this section, you should install contract management software to assist you with contract-related tasks. An automated system for contract management will move all contracts into one central site.
The most important aspect of the implementation phase is ensuring that everyone who is involved fully knows your vision and goals. Make sure that they are comfortable with the tools they’ll use. If they’re not familiar with these tools, they may introduce a variety of issues and mistakes in the process of managing contracts.
Now that you have your contract management foundations in place, start implementing them for any new contracts. This includes creating new contracts to address more common scenarios. Developing patterns and documents suited to your business’s requirements and goals are strongly advised when you are in this stage. This can save time and also helps in ensuring compliance. A contract can help you stay on track.
Administrators must clarify any issues in terms of the contract.
Remember these when you are creating new contracts.
- Make it easy. Search for similar contracts similar to the one you’re working on and then modify them to suit your needs. This is recommended as creating contracts from scratch is complicated and time-consuming.
- Once both parties have reached an agreement and have signed the contract, move to the next step.
When a contract is drafted and signed, it’s handed over to the people responsible for executing it. The people who are responsible for executing contracts are not the same people who made the contract. For the contract to be completed as it should be, it’s crucial to make sure that the contract is executed with ease transfer.
Don’t think that everyone has everything they need. Spend time going through all contract specifics, including the roles, responsibilities, and milestones. A thorough handover strategy is essential to ensure that the project will be completed on time and without any issues.
At this point, you will see all the objectives of your contracts will come to life if you manage them properly. It is here that you need to pay attention to every condition in your contract. This means you must ensure that all goes as planned. Inadequate control of inactive contract could result in problems for your business. Utilize contract management software to aid you in organizing and planning your inactive contracts.
Somewhere, the plans you made came to an end. This is not different for contracts, as they will eventually come to an end. The term of agreements can be shortened into a natural conclusion. You can renew a deal or decide to end it.
It is crucial to begin planning the expiration date of your contract proactively and promptly. This is the ideal time to assess the performance of your contract and determine if you would like to renew your contract or make any modifications.
Inform stakeholders of the expiration and renewal dates. Take the time to think about all information before making any decision.
After a contract has ended, it is not over yet. There is some cleaning up to be done to ensure that all is done correctly. This can be done by ensuring that all termination requirements are fulfilled by releasing final invoices, fees, and the preservation of your contract.
Be prepared and be informed of the conditions of your contract to avoid issues with contracts. Post-mortem contracts offer valuable insight into your process for managing contracts and allow you to make improvements and enhance them.