While often overlooked, contract management is important for your product strategies as this is where your expenses bleed. Efficient contract management can reduce your costs, minimize financial risks, and ensure your business operates at its maximal operational and financial capabilities.
Successful contract management ensures that the organization never has to go through contract disputes, has efficient business transactions, has complete support from its vendors and contractors, and provides satisfactory services to both parties involved. However, successful contract management is easier said than done.
Stages of contract management
Contract management is a time-consuming and data-heavy process that needs attention to detail and accurate tracking. Poor phrasing in your contract can cause a big dent in your profits. Hence why contract management needs not just muscle power, but a lot of expertise in different areas such as legal, finance, business domain, and more.
You need a systematic process that adapts to your business requirements and efficiently helps you get through each contract management stage. Here are the common stages involved in contract management:
Creation
This stage includes the initial request for a contract and the creation of contract documents. With automated contract management systems, you can easily create error-free contracts and streamline the entire process for better speed and accuracy.
Collaboration
This stage involves peer reviews and proof checking to hone the contract further to reduce the negotiation time. You can find contract management solutions that allow you to easily share, edit, and automatically keep track of the various versions of the document (version management).
Signing
This stage is when the contract goes through the approval process from upper management and is ready to be presented to the parties concerned. With automated workflow solutions, you can speed up the approval process and avoid any bottlenecks that usually occur during this stage when things are done manually.
Tracking
At this point the contract is under execution. The project managers are supposed to keep track of the contract terms and ensure that the project proceeds according to the stipulated terms under the contract. During this stage, the contract could undergo several revisions, amendments, auditing, and reporting.
Renewal
Renewal is one process that often gets delayed or missed in a manual contract management process. Forgetting renewals can result in missed business opportunities. Using automated solutions will ensure your contract renewals are done at the right time and provide you with alerts so that you have enough time to create better contract terms for your renewals.
Tips to optimize contract management
Here are a few tips on how to optimize contract management:
- Set goals and ensure that your contracts align with these. Do not try to make contracts at the last minute. Instead, make them part of your strategy from the early stages of procurement.
- Use robust document sharing and storage solutions that help with proper versioning, organization, and identification of all your contract documents.
- Ensure traceability with respect to all contract-related communications and workflows to increase accuracy and transparency.
- Good invoice designs go a long way in capturing and sharing accurate information throughout the contract management process. You can use expertly designed templates to avoid confusion and create invoices quicker.
- Capture all relevant data and provisions within the contract. Model contracts can be useful to help you gather all the relevant information with ease and ensure you don't miss out on the specifics.
- Seek legal expertise and contract management consultation to check and review your contracts before executing them.
- Include user guides to simplify contract navigation and make both parties understand any complexities within the contract documents.
- Ensure to track all information flows that are part of the contract management process and record them in relevant KPI reports, progress reports, etc. Use these reports and data for auditing and further improvement of business processes. These reports can also help you identify any problems early on so that you can address them as soon as possible.
Read on: How technology improves project management
Why should you use automated contract management software?
As you can see, almost every contract management stage stands to benefit from an automated contract management solution. Automated contract management software can be easily integrated with your enterprise solutions and help you save a lot of working hours. It also helps you minimize manual errors and streamlines the entire contract management process. These solutions can also help you adhere to compliance and standards with minimal effort.
Here are some crucial aspects of contract management software that you should be looking into:
- Make a list of evaluation criteria that contains all the features you are looking for in contract management software. Do you require specific features like invoice automation, document sharing, approval automation, and so on? You should also have a good idea of what kind of end-user system you prefer. Do you want an online solution, a collaborative platform, or an enterprise solution? Think about the criteria you’re going to use to evaluate your options.
- Involve key staff who work in the contract management process and get their input before selecting the software.
- Consider the data regulation, compliance, and standards to which you want the software to adhere to.
- Involve your IT team so that you understand the technical compatibility required to adopt the prospective contract management software.
- Look into the user training and support provided by the software vendor.
Use Vault ERP for effective contract management
Vault ERP has an entire module dedicated to contract management. This module manages your contracts and their sensitive information, allowing you to track contracts from creation to execution and analysis. In addition to keeping all your data in one place, Vault ERP provides you with the following features:
- Provides a clear overview
- Enhances efficiency
- Accurately tracks contracts
- Supports e-signatures
- Ensures no deadline slips away
Be sure to contact us if you’d like to find out more about Vault ERP and how it can help you effectively manage your contracts.
