Contracts are near-universal truism across the business world. Regardless of industry, size, and structure, contracts dictate how we do business and how we adhere to the agreements we make. Any businesses operating without contracts may not be compliant with existing regulations and at severe risk.
Contract management is, essentially, the administration of contracts between all parties. Here, we’re going to look at the steps of contract management, why it’s essential, and how contract management software can help.
The process of contract management
First, let’s take a look at the steps by which you complete the contract management process:
- Contract creation: Though many businesses will use templates for contracts they carry out, contracts do have to be created to begin with.
- Negotiation: This is where the stakeholders in a contract review the text and identify potential pain points or parts that can be improved upon.
- Adherence: Ensuring that both parties fulfil their obligations is just as crucial a point of contract management. This can include the writing of service-level agreements and key performance indicators that allow you to track compliance with the contract.
- Signature: Every stakeholder has to have the time to review and agree to the details of a contract before it’s signed.
- Making changes: As the relationship with the client or vendor evolves, changes may be necessary, including solving problems that either party has experienced up to this point.
- Documentation: Every edit and change must be documented.
Why contract management is necessary
Without effective contract management, it’s too easy to make errors in the process that can be severely costly. For instance, having all stakeholders sign a contract without the chance to review and negotiate a contract can put you in legal danger. What’s more, without the ability to measure adherence to the contract, it’s easy for you to miss when vendors or clients are not carrying out their end of the deal.
How contract management software helps
A contract management system allows you to stay in control of the process and to monitor all existing and pending contracts. You can see which part of the process each project is in, track deadlines, and ensure that you’re taking essential steps often missed like giving all stakeholders access to the contract before signature. It can streamline and automate many of the parts of the process. This means you get contracts completed quicker, maintain your reputation, and are more likely to ensure compliance.
Furthermore, you have greater control over the accessing and archival of all versions of the contract. Using a Cloud-based system instead of paper or transmitting digital documents directly, you can control who can access it and whether they can make edits or simply view it. What’s more, you archive every new version of the contract pre- and post-signature, so you can quickly identify what changes have been made and by who.
Ensure you’re using an effective contract management system
Hopefully, the guide to contract management above helps you understand the process at least a little better. Contract management software can streamline and automate much of the points mentioned above, so you can complete contracts more quickly with much less difficulty.