Whether you are a big business or a small organization, you’ll certainly need to focus on your contract management strategy. Organizing and managing your contracts can actually be an easy deal through proper planning and management.
A contract management strategy is a fundamental guide in managing a portfolio of contracts and their associated data through the contract lifecycle in an effective manner. In this article, find out the best practices for contract management and your do’s and dont’s.
Table of Contents
- What is contract management?
- What are the objectives of a contract management strategy?
- What are the best practices for contract management strategy?
- Do’s and don’ts in contract management
- Key Takeaways
What is Contract Management?
Contract management involves taking care of your contracts by organizing, synching, and keeping track of them. That is the gist, but there is more to a contract management process than organization.
Businesses need to set contract management in place because it can make or break their possible profitable deals. But to do that, a strategy has to be set in place to meet the business’s key performance indicators.
What are the Objectives of a Contract Management Strategy?
Here are some of the objectives of a contract strategy:
To improve your contract lifecycle management
Having a contract management strategy can help improve your contract lifecycle management. For instance, a strategy can help improve the process of expiry notification in case your contract ends. That way, you can be more informed of the deliverables you have to meet and the costs you have to spend.
To make the client and service-provider relationship better
A contract management strategy can help both parties know the deliverables set are met during the agreement. This is because a strategy can help you set, for example, a better mode of communication for your business and your clients.
To help you take more ownership of your sales and processes
Contract management not only allows you to handle contract writing, signing, and expiring. It is also about meeting the KPIs that were set. But more to that, it can make or break your sales. Hence, a management strategy can help ensure that you meet the quota for profitable deals made and closed per month within the given timeline.
What are the Best Practices for Contract Management Strategy?
There’s no one-size-fits-all practice that will generate the same results for all businesses. That is because every business has unique USPs and goals that they want to meet in their respective timelines.
However, here are some of the general factors that you have to keep in mind in formulating your contract management strategy:
Your contract management strategy should cut down on your time in managing your contracts. And although that appears like a simple task, it isn’t because some managers don’t know where to start in streamlining things.
So to formulate a strategy that would surely work for you and your business, think of the end in mind. What do you want to achieve with this strategy?
A contract lifecycle refers to the process that encapsulates the making, signing, keeping, and expiring of contracts. This is important to note in making your strategy because it should be complementary to the agreed timeline of each contract you signed.
The length of each contract you have is different from one another. Hence, when you formulate a strategy, you need to make it flexible. How can I make this work for most, if not all?
If one of your goals is to automate contract management, your strategy should take this into account as well. There is various software that does this. Automating contract writing, signing, and expiring notification can streamline contract management in no time.
So, your strategy should highlight your investment in software that you think would work best for you. You can highlight the answer to the question: Why should we invest in this?
Do’s and Don’ts in Contract Management Strategy
Perhaps when you think of contract management, you will think the only person responsible is your contract manager. But that’s not the case. So, here are some do’s and don’ts for a better management strategy for your business:
Onboard your team members with the implemented strategy
To make your strategy effective, every team member you have should be aware of how it works. In that case, everyone in your team can adjust to changes when they come. That way, they can act accordingly.
Involve your clients and team with changes
Your clients are an extension of your team. You need to keep them involved in certain changes that would happen because an agreement binds you already. Discuss possible changes and what they can do with them. But, you can choose not to disclose the exact strategy to prevent them from working with others using your systems.
Identify your needs
Contract management software can greatly help implement your contract strategy more effectively. To make the most out of your investment, you need to identify your business needs. That way, you can only invest in the software that surely works for you.
Commit to what you can’t provide
Contracts bind you and your clients legally. So, it is crucial that you read the terms and conditions thoroughly to be familiar with what you need to do. What could go wrong can be taken against you in court. Know your limits and capabilities.
Invest in software quickly
There is no one-solution-fits-all for businesses. Hence, it is important to identify your needs first so that you can only avail of the best match for you. Don’t feel pressured with what everybody else is using. Use your metrics to your advantage.
Ignore your data
Your data will tell you about the things that you need to improve and maintain. Again, use your metrics to your advantage so that you can identify which software is best for you to use. That way, you can set your goals right.
With the host of online tools available for contract management strategy, staying organized shouldn’t be that difficult for small businesses or large corporations. This is especially important for organizations that regularly re-engage with their clients to negotiate new contract terms.
Much like general record keeping, a good organization system should lead to more profitable deals and improved business relationships over time. By setting up a framework around your contract management strategy and using it consistently, you can ensure that your team maintains a successful edge over your competitors.
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