How to Improve the Contract Management Process
It’s 5 a.m. on a Tuesday, and a call wakes you — it’s from your sales manager. He tells you that negotiations have wrapped with a promising international client, and they need to sign a multi-million dollar agreement within three days.
The contract he sends you references certain documents that you haven’t reviewed. Unfortunately, some key members of your organization are out of the office. You call your sales manager, explain the situation, and ask for more time. He tells you it wouldn’t be possible. But a sign-off from you can buy more time. You politely decline and ask for more time to consider your options.
Ironclad’s contract lifecycle management (CLM) software can help solve this problem and ensure that you don’t find yourself stuck again in a similar position. Read on to learn how to improve contract management using CLM software.
Why having an efficient contract management process is important
A contact’s lifecycle consists of three key stages:
These stages are further divided into multiple other classifications, which may prove grueling due to the number of steps and intricacies involved in adequately managing a contract.
Contract management is generally a disjointed and widespread process usually done across numerous platforms such as spreadsheets, Google or Microsoft Word documents, emails, and paper. It may also lack transparency and collaboration as legal teams would be handling them along with other legal operations such as procurement, HR, finance, and sales after other legal work-related backlogs clear up. Additionally, during this process, it’s harder to access analytics and information to improve your contract. That’s why it is essential to have a well-defined system in place to counteract these challenges.
Contract management can be time-consuming, puzzling, burdensome, and may distract from the business itself. Contract intelligence or digitalization of contracts is the new and only way to move forward with contractual agreements. The solution to these multifaceted problems requires automated and effective contract management systems — the type that Ironclad’s Contract Lifecycle Management (CLM) software provides, helping our clients effectively and efficiently manage contracts.
Contract management process
If you’re wondering how to improve contract management, you need to properly understand how it works. The contract management process involves the creation of an agreement, how its managed and executed, and whether or not it’s renewed. Notable events during this process that may be augmented to improve the contract managing process include, but are not limited to:
- Implementation analysis against the terms of the contract, which aims to boost financial and operational accomplishments
Identifying and reducing reputational and financial risks that arise due to non-compliance with the stipulations of the contract
Key features of contract management
As mentioned above, there are multiple steps and processes involved in improving an effectively managed contract. Some of the main features of the contract management process are:
- Service delivery: Ensuring products are delivered when they have been requisitioned.
- Relationship management: Improving the relationship between the retailer and the procurer by consolidating contact between the relevant parties.
- Contract management: Governing and overseeing the daily processes of procurement and guaranteeing that they are in line with the contractual agreements.
- Seeking improvements in the contractual agreement: Regularly modifying the contractual agreement so that the contract is more accommodating to changes in the business environment, thus ensuring that the business model between the concerned parties remains relevant and updated.
- Continual evaluation: Ensuring that activities are in line with relevant rules and regulations promotes quality services — it’s why regulatory checks are critical to every business model.
Changes may arise due to amendments in laws relating to trading, import, and export, or due to a change in a third party’s company plan. All of these modifications could have a significant impact on your business and inadvertently on the contract. Over a longstanding procurement affiliation, alterations in activities need to be efficiently noted and handled.
Renewal and termination management
Contracts are usually time-mediated, meaning that they span over a specific period, though they may be renewed on terminated towards the end of their lifespan. This depends on various aspects such as a business’ future goals and needs, mercantile appeal, and prior experiences with the supplier.
How to improve contract management
Certain steps may be taken to improve the process of contract management. The management process usually involves numerous departments, employees, platforms, and systems and generally lacks collaboration. Without a well-managed and efficient “all-in-one” system, the process loses traction. A lack of cohesion in this procedure can be detrimental to all parties involved and affected by the contract. Inadequately managed contracts will lead to an increase in liabilities, missing targets and deadlines, losing revenue, and a heap of other losses. Listed below are actions that could improve the contract management process.
- Standardize the contract by using templates: During the contract creation stage, templates and standardized legal terms may be used to enforce consistency. This stage usually takes legal teams weeks, if not months, to conjure up a contract.
- Track contract approval: Most businesses encompass numerous stakeholders that must all review and approve of the contract. It’s essential to track and manage this process as most contracts require re-evaluations and negotiations during this stage.
- Set Key Performance Indicators (KPIs): Establish definitive performance metrics to track the progression of a contract. This helps showcase whether course correction is required or if the contract is delivering on expected outcomes. This may be done by benchmarking advancement and progress indicators. It is a key step in improving the contract management process.
- Analyze and monitor contract risks: Contract risks need to be consistently monitored and assessed to avoid losses. A good way of doing that is to carry out compliance reviews regularly to manage and anticipate changes efficiently. This ensures that risks are minimized during the contract management process.
- Initiate and establish good contract communication: A well-established contract communication system could resolve disputes efficiently and avoid grievances, allowing for a seamless management process.
- Leverage contract data: Data collected from consumers can be used to enhance future projects. Leveraging contract data via integration is a valuable tool to collect data from consumers on how the contract is performing. Data from each project, such as the contractual process, the project control environment, and alerts, for example, could be collected at one repository or platform to combine all the information and adopt a holistic approach when approaching new projects.
- Hire a contract management consultant: Most of the issues that arise during contractual management may be handled by a contract management system, such as those available at Ironclad. We can professionally manage your contracts and avoid costs caused by a lack of legal expertise.
- Automate: In this age of digitalization, most solutions to recurrent problems are a click away. Contracts could also benefit from this innovation. Not only do automated contracts keep up to date, allow for collaborations, sanction easy access to data and information, but they also ensure data security and reliability. Products such as Ironclad’s CLM software address all of the challenges mentioned while cutting costs.
How Contract Lifecycle Management (CLM) software can help
CLM software not only improves the contract managing process but also safeguards all of your data and contracts on one platform. It allows for unlimited users and editors with easy clearances and makes documents accessible. Reliable CLM software, like Ironclad’s, can be a fix for innumerable problems faced by organizations that have yet to digitalize their contracts.
A poorly managed contract can be:
- Widely dispersed: The contract managing process may be spread across multiple platforms, from spreadsheets to emails to word documents, making it almost impossible to keep track of what you want.
- Disorganized: Contracts may rely on several departments, personnel, various systems, processes and demonstrate a disjointed management process.
- Lacking transparency: No insight into the workings of the document, which may also be prone to human error and avarice.
- Expensive: Technicalities and misinterpretations of legal jargon cost companies thousands of dollars recurrently.
- Complicated: No analytical information is available to improve operations that may present with severe backlogs.
- Time-consuming: Effectively overseeing the three essential stages of contract management is time-consuming and troublesome.
Some features of a contract managed by CLM include:
- Seamless and comprehensive: All your information is available all in one place.
- Enables self-service: The CLM’s user-friendly interface ensures that all of our business sourcing consumers get exactly what they want, allows for complete transparency, and hands the steering wheel to you.
- Avoids bottlenecks: No more waiting on backlogs to clear up to get your contract reviewed by a professional.
- Streamlined: No more isolated processes.
- Workflow designers and repository benefits: Team-workers may retrieve any information they require at any given time.
- Cost-effective: Eliminates overhead costs associated with contracts.
- Mitigates Risks: More control or revenue and risk-related issues.
- Eliminates redundancy: Since enterprise-wide visibility of contracts and related information is improved, surplus information entry is reduced substantially.
- Increases collaboration: Contract managers, legal professionals, procurement managers work together using the same tool.
- Legal Compliance: As vendors and suppliers use a common drafting tool, the terms and conditions of the agreement can consistently be molded to the majority’s liking and convenience.
Knowing how to improve contract management begins by understanding that a dire need for automation and reliable management creates problems. Various steps can be taken to resolve these problems yourself. Or, you can turn to Ironclad. We offer a variety of software products that handle all of the nitty-gritty business details, including contractual management.
Ironclad’s CLM software is a powerful and efficient tool that simplifies and streamlines complex and dispersed aspects of business contracts and makes them accessible to users. Request a trial to learn how to up-level your contracting today.