A version of this Article originally appeared on The Official ContractWorks Blog.
Contract management encompasses more than the act of successfully signing and negotiating a business agreement – it includes the full lifecycle of your agreement, starting from planning and concluding with final actions and analysis that occur once a contract period has concluded.
But in order to truly understand the business benefits of improving your approach to contract management – and to start to turn potential gains into actual ones – it’s helpful to unpack the statement and define both what seamless contract management looks like and the value it can deliver.
With such a large proportion of revenues tied to contracts, making the contract management experience a seamless one represents a key opportunity to improve bottom lines for many companies.
Here are five reasons why a seamless contract management experience is important for your business.
1. Time is money
It’s an expression you probably hear all the time – and when it comes to contract management, with its potential for inefficiencies and bottlenecks, multiplied across the full volume of your contract portfolio – it’s true. Without a clear process for managing contracts, it’s easy to waste valuable time and resources reinventing the wheel every time a new contract lands on your desk: Where should it be stored? What happens next? Who is responsible for what? These are all questions that a solid process can help to answer both quickly and definitively.
One of the most fundamental ways to ensure a seamless contract management experience is to develop and implement an organized contract storage system. This will enable timely access to contracts as they are needed throughout their lifestyle and eliminate the slowdowns and lapses that can result when you don’t know where an individual contract is.
2. Get more value out of your contracts
Though contents will vary, your contracts carry an itemized list of deliverables and obligations you are relying on coming to fruition. But it’s up to you to ensure this happens as expected – and it often does not. Part of creating a seamless contract management experience is having a plan for monitoring how your contract is performing while it is still active, so that you may take steps to course correct should your agreement not be delivered according to its terms. As well, baking in steps to review your contract before its conclusion can help you identify and claim unrealized value before it’s too late.
3. Reduce contractual risk
If your contract management experience is disjointed, any special details that require careful attention during the contract period can too easily get lost in the chaos. But having a seamless plan to manage your obligations throughout the contract lifecycle can also mitigate contractual risks, from compliance-related obligations to unusual terms that require special handling.
4. Resolve problems faster
Problems during the management of a contract can result in everything from delays to total project derailments; and when issues do occur, your contract document itself should be your first point of reference as it can help you to determine the appropriate solution. Part of smooth contract management is ensuring that contracts are easy to find and easily accessed by stakeholders – so that when problems arise, you can minimize the fallout by getting to work on a solution faster.
5. Stay ahead of the curve
Have you ever gotten locked into an auto-renewal because you missed the window to terminate, or re-upped on an agreement without assessing how well it worked for you the first time around, simply because the renewal sneaked up on you? A seamless contract management experience involves a clear plan for navigating each stage of the process, including identifying key dates up front. This means you won't be taken by surprise by an important milestone.
Understanding Seamless Contract Management
A seamless contract management experience takes you from the first stage, in which you determine what an optimal deal looks like and work with the other party to come to mutually-agreeable terms, through signing to the performance stage, in which your objective is meeting the terms and deliverables outlined within your contract and ensure the other party does the same.
As things begin to wind down, you will reach the pre-renewal phase, in which you assess the contract’s performance against your expectations for it, determine whether a new agreement (or renewal) is needed, or choose to terminate. Last comes the post-contract period, in which you close out your agreement by ensuring all obligations have been met, final invoices have been paid, your contract has been archived as required, and conduct a post-mortem.
Optimizing Contract ROI
Though it can be broken down into a series of simple-sounding steps, contract management is complicated, detail-oriented work, involving disparate business teams and stakeholders, important milestones that must be observed, and other crucial tasks. An ability to navigate these efficiently – using a defined and documented process to ensure every important action happens when it should and managed via dedicated contract management software – is an important way to reduce the complexities and risks and improve the ROI of your full contract portfolio.
As the future of legal departments adapts to include new contract management solutions, seamless contract manage will become the norm as organizations reap tremendous benefits in terms of simplified workflows, improved organization, and increased productivity. In Unlocking the Value in Your Contracts, you can discover how to identify and leverage the untapped opportunities that exist in your organization’s contracts.
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