Although contract lifecycle management is one of the most integral parts of running a business, it is often overlooked. Admittedly, it’s not a particularly easy task to undertake. Managing contracts involves much more than writing an agreement and getting the other party to sign it. There are different facets that you have to consider.
Today’s article will walk you through the simple yet effective ways to develop an effective and efficient contract management system. Here’s what we will cover:
Table of Contents
- What is contract management?
- Why is contract management important?
- What are the stages of contract management?
- How to effectively manage contracts? The Best Tips and Practices
What is contract lifecycle management?
By definition, contract lifecycle management refers to all the processes involved in making and executing contracts and agreements. Moreover, it also includes mitigating risks, reducing costs, and maximizing business performance.
Over the years, managing contracts has evolved into something multi-faceted. Nowadays, it also requires an in-depth understanding of your contracts’ lifecycles and their corresponding data insights. This allows you to gauge your organization’s performance and helps you identify the particular aspects in your organization you can improve.
Why is contract lifecycle management important?
It’s been said that contracts and agreements are the backbones of business relationships. The effect they have on your organization is astronomical. How you manage them can either make or break your business’ success. It cannot be stressed enough that regardless of the size of your organization, you need to develop a solid, well-oiled document management system.
On average, your business will probably deal with more than a dozen contracts between you and your suppliers and clients. Without a structured system, things can easily get out of hand. You will expose your organization to financial risks and contract compliance issues; both can be catastrophic.
Conversely, having a proper contract management system can help you avoid these unfavorable circumstances and increase your overall workflow efficiency. Your staff will know exactly how to handle your contracts and agreements.
Moreover, having an effective management contract system helps you build better relationships with your clients.
What are the stages of contract lifecycle management?
Before we get into the best contract management practices, it’s best to know its stages. Let’s explore them:
Before you implement any system or process, it’s ideal first to map out all the essential details. Take a look at your objectives and create a roadmap to help you achieve them. Aside from that, you can also do a thorough evaluation of your current system to help you identify the common problems that cause major issues. You also need to appoint your team members responsible for each step or process during the planning stage. Additionally, determine what you need to help your process run smoothly.
You might find yourself spending a lot of time at this stage. It’s best to take your time to avoid any troubles during the implementation.
Once you have sorted your contract management plan and everything is in order, you may start implementing the system throughout your entire organization. See to it that everyone perfectly understands how the system works.
This is also the most opportune time to educate your staff about the proper way to use the tools should you provide any.
After onboarding and even long after your contract lifecycle management system has been implemented, it’s best to review how the system works periodically. This allows you to identify any parts of the process that causes inefficiencies. Work on them and make necessary changes to improve the workflow.
How to effectively manage contracts? The Best Tips and Practices
Standardize your agreements
Making contracts from scratch every time you want to enter into an agreement with new clients or supplies can be extremely time-consuming that certainly slows down the process. What you can do to increase efficiency is to have standardized and pre-approved contracts at your disposal at all times. This way, the only thing left to do is make the necessary changes or revisions.
Improve team collaboration
While the legal department champions contract management, it’s still essential for your organization to have everyone involved with the whole process. Everyone has to collaborate for better accountability and prevent any bottlenecks from happening.
Establish key performance indicators (KPIs)
One of the ways to determine whether your system works is to set certain metrics. You can schedule a periodic evaluation to see what works and what doesn’t. Your KPIs should align with your current goals and objectives. They should also provide you with the insights necessary to identify parts of your process that help you achieve your goals.
Conduct compliance reviews
Contracts are legally binding documents that you need to treat with utmost care. As a business owner, it is important that you ensure that your organization is in compliance with all of the governing bodies and regulations. This is crucial to protect it from committing any infractions and violating laws and guidelines.
Introduce software and tools
In order to keep up with today’s modern times, you need to equip your organization with the necessary software and tools to help you digitize your processes and streamline and automate your workflow.
These days, there is a wide array of excellent tools available to help with contract management. They are very well worth your investment as they are designed to make the contract process more manageable.
One tool that we highly recommend to get is an electronic signature application that enables you to sign contracts and agreements without printing any of the documents. This also allows you to collaborate with the other party to discuss your agreement’s content in detail and make necessary changes as quickly as possible. This tool helps simplify the entire document workflow process from creation to execution down to termination.
Fill has everything you need and more when it comes to electronic signatures. Fill is secure, fast, and extremely easy to use. There’s no need for any fancy gadgets or equipment. All you need is your mobile phone or computer, and you can sign any documents anywhere at any time. For more information, check this out.
It cannot be stressed enough that you need to invest considerable time and effort in building solid and efficient contract management. Hopefully, this article has imparted a few helpful tips to help you with this matter.