Contract management is an essential ingredient of a successful business. It should be the top priority of every business because it is integral to business operations. Apart from that, it also establishes clear communication between two or more parties and prevents disputes.
So in this article, we will talk about the contract management best practices so that you can maximize its results for your business. This will then allow you to input less work and benefit from more results.
Table of Contents
- What are the Benefits of Contract Management?
- Why Shouldn’t You Ignore Contract Management?
- What are the 6 Contract Management Best Practices?
- Key Takeaways
What are the Benefits of Contract Management?
Contract management best practices can drive more sales to your business. But internally, there are benefits that can improve how your teams function as well. Here are some of the benefits of contract management:
- Better communication between the teams and parties involved
- Reduces and manages risks that might arise throughout the timeline
- Cuts down on resources spent on actively checking and reviewing contracts
Knowing your contracts and working your way around it can make or break your business. So, contract management saves you from so much trouble. Here’s why you shouldn’t ignore it.
Why Shouldn’t You Ignore Contract Management?
While you might think signing a contract seals the deal, you’re right. But your work doesn’t end there. You have to manage them and keep track of the responsibilities and dates included in the paper you just signed.
Here are some of the reasons why you should integrate contract management best practices to your company and never ignore them again:
It drives you away from business opportunities
Do you know what entrepreneurs have in common? They want to take good care of their businesses. They want to delegate and partner, and they want to do it with people and companies who can automate. So automate your contract management.
If you won’t, you may lose customers who want to use a third party service provider. Apart from that, competitors might use their contracts as leverage against you and get better deals.
It is prone to human error
If you don’t take your contract management seriously, you will be met with honest errors along the way. But while they are completely normal, they are not always acceptable. The reputation of your business is on the line, among many others.
Apart from this, the sales and existing deals you have at the moment will be greatly affected. It will have an impact on your trustworthiness, or the lack thereof. So if you overlook some details, it will cause a ripple effect on your business.
It can cause legal issues
Not thinking of contract management best practices can put you in a huge trouble. It is inefficient and messy when it comes down to agreements, sales, and KPIs. The thing is, your contracts binds you legally with the other party you signed to work with.
Mismanagement of contracts can lead to a lot of things. Works not submitted, deadlines not met, and KPIs not achieved are just some of it. Apart from this, it can do harm internally because you might work beyond contract terms. Thus, you might exerting resources over things that aren’t compensated.
What are the 6 Contract Management Best Practices?
Contracts are an essential part of doing business, and managing them well can save you time, money, and legal headaches. So when it comes to managing contracts, there’s a lot to consider.
While there are many best practices for contract management, here are some of the most important ones:
Know your contract
This seems like common sense, but it’s important to know what you’re signing up for before you sign on the dotted line. If you don’t understand everything that is going on in the contract, ask questions until you do. Don’t be afraid to ask for clarification or ask for changes that would benefit your business as well as theirs.
Set up key performance indicators
Sometimes, KPIs are already set within the contracts. But for others, it’s not. The best thing you can do is set a separate KPI internally. This will help you determine the effectivity of the strategies you will be putting to place. That way, you can adjust them accordingly to meet the KPIs set in the contract agreed upon.
Set up an effective contract management system
A good contract management system will help you save time and effort by making sure all contracts are stored in one easy-to-find place. It should also allow users to easily create and edit contracts, send them out for signatures, and track their progress through the approval process.
If you are looking for a good contract management system, you can try out Fill. It gives you a lot of contract templates to choose from to streamline a step in the contract lifecycle. It can also notify you whether the contract is viewed, signed, and completed as well.
Put contracts on auto-renewal unless otherwise specified
Most people want contracts that are automatically renewed when they expire — unless they’re notified otherwise beforehand. Make sure your system allows for this type of flexibility so you don’t need to manually renew every contract every year.
Use templates whenever possible to save time and money
Templates make it easy for users to create contracts quickly based on existing templates with only minimal customization needed. At Fill, there are a lot of templates available for use. This help reduce errors by providing an easy way to set things straight before sending it for signature or review.
Automate contract expiration for you and the other party
When you automate contract management as a whole, you will be reminded of the boundaries that are both agreed upon by all parties. This means that you can pause ongoing works until contract renewal, if it will be renewed at all. You can automate it using the Workspace integration at Fill.
All you have to do is save the contract expiration on your Google Calendar as a reminder, and notify yourself via Gmail. Once the date arrives, you can notify your teams and the other parties as well.
Contract management should be a straightforward process, but in reality, it’s not. Human error, lack of communication, and forgotten files are just some of the challenges that plague even the best teams.
The key is to minimize mistakes by creating strong systems with simple procedures that are followed each time a contract is involved. Whether it’s better-defined roles and responsibilities or access points for all members using cloud-based contracts, there are best practices available to make your contract management process stronger and more efficient.
So make that change for your business today! Try contract management with us. Open your free account in Fill here.