5 Avoidable Mistakes in the Contract Management Process
If you want to partner with a person or organization outside of your company, you’ll need a contract. Contract management is the process companies implement to see the lifecycle of a contract come to fruition. Soup to nuts, this process encapsulates negotiation, execution, modification, and termination of contracts.
The contract management process is tedious, yet an essential part of building positive relationships with customers, vendors, distributors, contractors, and employees.
Here are five preventable mistakes during the contract management process that will help mitigate risks, save money, and efficiently guide your resource allocation.
1. Don't underestimate the contract development timeline
Assuming your negotiations went well, allot more time than you think to draft the contract. Contracts are designed to mitigate potential risks in a relationship. It’s important to strategically think through negative scenarios that might occur during the contract lifecycle. For example, a contract should address what happens if the other party files for bankruptcy, shows misconduct, goes out of business, etc.
2. Don't skim over the contract
In larger organizations, it’s common that the negotiators are not the authors who will execute the contract, i.e. sign on the dotted line. In order to cover your bases, plan to sit down with the authors to ensure a smooth handover. Do not assume they understand the full context of the partnership. Walk through each contingency to ensure nothing is ambiguous or uncertain.
3. Don't rush through the redlining phase
It doesn’t matter how much preparation you put into the first draft of a contract, additional negotiation is inevitable. This is when contracts are most prone to human miscommunication and clerical errors. Both parties will race to update terms in real-time. This causes confusion and disorganization. Ironclad offers a single source for these occasions which will result in quicker negotiations, reduced human error, and two-sided visibility and collaboration.
4. Don't waste time during contract execution
At this point in the contract management process, you’re close to the anticipated finish line. All you need is a few signatures to create a legally binding contract. Don’t lose momentum by defaulting to a faxed or hand-delivered signature retrieval. Through an electronic signature method, you can quickly finalize a contract – and more securely.
5. Don't forget to see your contract through
Contract management doesn’t stop once the signatures are collected. Perform regular audits to ensure everyone is holding up their end of the bargain. Set alerts for deadlines and renewals. Also, even though the contract is finalized, be prepared to apply revisions because they are a common part of the contract lifecycle.
As your partnerships multiply, it’s easy to avoid mistakes time setbacks throughout the contract management process. Learn how Ironclad can help every step of the way.