Contract management is often one of the most overlooked aspects of running a business, yet it is one of the most integral parts of a successful venture. Most people think that once the document is signed and sealed, they can just shove it into storage and forget about it. Others find managing contracts daunting and often make it the least of their priorities. But did you know that poor contract management can cause businesses to lose around 9% of revenue? That certainly isn’t good for business.
To avoid profit loss, we will walk you through some of the most basic and vital things you need to know to have an effective contract management system.
Table of Contents
- What is contract management?
- Why do you need to manage your contracts effectively?
- What are the tips for managing contracts?
- Key Takeaway
What is contract management?
As the name suggests, contract management refers to managing agreements from creation to completion until their termination or renewal. To build a solid contract management system that’s efficient and effective, you need to know the ins and outs of the contract lifecycle.
Contract management is more than just handling contracts. It is also about identifying risks and looking for ways to mitigate or reduce them. Moreover, it involves finding the best tools and technologies to improve your processes.
Additional reading: Contract Management 101: Guide to Best Tips and Practices
Why do you need to manage your contracts effectively?
Contracts are more than just a document. They are essentially the backbone of any business relationship. If you treat contract management as an afterthought, it can lead to serious issues with serious repercussions. Aside from that, here are some other benefits of having an effective contract management system:
It helps you fulfill obligations.
No matter the size of your business or organization, you are bound to enter into multiple various agreements with clients are partners. At some point, you will deal with hundreds of contracts simultaneously. As you can imagine, managing them can be quite challenging and stressful, especially if your system is inefficient.
Investing in a solid contract management system can help ensure that all your obligations are fulfilled. And it also enables you to keep track of the other party’s obligations. You also do not have to worry about incompliance and breaches.
It helps your organization become more efficient.
One of the most significant advantages of having a contract management system for your business is that it can vastly improve your overall performance and efficiency. When you put in place policies and procedures for every stage of your contract lifecycle, you should be able to eliminate redundancies and inefficiencies.
When you have the right set of tools, you should also be able to identify the areas of your processes that need improvement or change. This should give you an overview of which areas in your operations cause bottlenecks. Improving your contract management system can have a resounding impact on your entire organization. If your system works seamlessly, the rest will follow.
It helps reduce operational expenses.
As briefly stated, a poor contract management system can cause your organization many losses. But aside from that, you are more likely to incur higher expenses. Any process that has a long turnaround time is going to cost you money. Thus, the lower your expenses will be if you can minimize the time spent managing your contracts and ensure all your obligations are met.
What are the tips for managing contracts?
If you are unsure where to start with your contract management system or just want to improve your current one, we have compiled a list of tips and tricks for you.
1. Make contract management a top priority.
Invest enough time and effort into building a solid contract management system. It’s about time that you treat this aspect of your business with a matter of urgency.
To get you started, look at how you manage your contracts and agreements right now. Take notes of the areas of the process that cause inefficiencies, delays, and mismanagement. Then work from there. Having a checklist can help you and your team keep track of things.
2. Go digital.
One great thing about living in such a modern world is that plenty of tools and technologies are at your disposal. Use them to your advantage. One particular tool that is worth the investment is a document signing app or an electronic signature app like Fill.
When you sign up with Fill, you can cut the time spent handling contracts by almost half. You do not have to spend too much time printing and mailing documents as you can safely and securely send them online. It’s also a fairly easy-to-use tool, so you will quickly get the hang of using it even if you are not entirely the most well-versed in computer technology.
There are also lots of features that come with Fill. For instance, you can integrate it with your favorite tools for maximum efficiency. Do you want to know more about Fill and how it can help with contract management, click here.
3. Get your team on board.
Implementing changes in your organization, especially if they are drastic, can sometimes be received negatively by your team. This is why it is vital to get them on board and the same page right from the beginning of your contract management makeover. Educate them with everything they ought to know about your plans. And most importantly, provide them with the necessary training if needed. This is vital when you are planning to introduce new software and tools.
You can also appoint contract management to help spearhead the process. You can choose someone with broad experience with managing contracts and preferably one with a background in law.
Improving the current state of your contract management workflow can be quite challenging. But it becomes more manageable if you just invest the right amount of time and pay enough attention to it. It will also help if you invest in the right tools to make your job a tad easier.