5 steps to better contract management
As a procurement professional, you’re expected to efficiently manage the contract lifecycle, from the cataloging, creation and execution of contracts right through to their renewal (or termination). Of course, with hundreds of active contracts, this is a difficult task. If your day-to-day responsibilities include contract management, you’ve probably experienced the pain of being saddled with unexpected costs or locked into poor pricing and service terms - and it was too late for you to do anything about it.
Managing your contracts becomes more tricky when you don’t have the right tools in place. If you’re still relying on legacy management tools including spreadsheets, email, shared drives and filing cabinets, you’re missing out on the opportunity to cut costs, maximize contract performance and reduce contract risks. In this article, we discuss five strategies for managing contracts more effectively.
1. Out of the filing cabinet, into the cloud
Organizations are continually automating and improving their contractual processes so they can adopt a more formal and structured system of contract management. And with remote work becoming more of the norm and less of an exception within many companies, the need for an easily accessible, digital repository of information is more important than ever. Using a cloud-based platform, you can store everything in the same place, giving you access to any contract-related data with just a few clicks.
2. Standardize your contract information
It’s important to keep your contracts accurate and information rich. A good contract management system should keep track of all the addendums and any historic information in order to maintain a complete and clear audit trail. Instead of having different information in different formats, it’s much better to develop contract management standards. For instance, by implementing standardized metadata, you can quickly classify contract types, dates,description and other information using filter functions. You can also search for the information you need quickly and easily.
3. Set up alerts and reminders
When your organization signs a contract, make note of the key dates so that your calendar can automatically remind you when you reach a specific milestone. For example, a renewal reminder will remind you when it’s time to review or renew the contract, preventing your agreements from rolling unchallenged from year to year. This strategy can easily be implemented with a Contract Management system, which is usually capable of sending out automatic alerts to notify the right person in the organization. You can also set up KPIs and milestones to trigger alerts, ensuring that the right person is following up on the right task to ensure project progress and minimize non-performance risks.
4. Ditch approval by email
Many businesses still rely on unstructured, inefficient and not auditable processes to create or edit contracts. These processes usually involve email - which has the potential to cause huge headaches from a version control perspective, since multiple stakeholders make independent edits and send different versions around. The problem is magnified in large organizations where even more departments need to have a say. You can streamline this process by mapping out the approval hierarchy, which can help you identify a clear approval, negotiation, renewal, and termination process. The latest contract management systems can remember your business and approval structure, which can then automatically trigger the delegation of authority, eliminating approval bottlenecks and reducing the contract cycle time. These systems also offer workflow management tools for easy editing, tracking, and version control, making collaboration effortless.
5. Control access
Centralizing all your contracts means that employees can access any documents whenever they need it, facilitating collaboration. However, it is also important to set up controlled access to certain documents, such as sensitive and confidential information. For instance, our Contract Management Software can map the access model according to your business structure, allowing you to segregate permissions easily so that only the people with the appropriate privileges can access the desired information. We enable organizations across the world to manage tens of thousands of contracts, helping them boost business efficiency, enhance productivity, and achieve better contract terms. If you would like to discuss your contract management strategy and explore the various options we offer to help manage your contracts more efficiently, please get in touch.
