Contract management is the process of controlling, administering and auditing contracts for an organization. If the organization has a legal department, it is its responsibility to perform contract management. It can be one of the more complicated and time-consuming aspects of doing business because many steps are involved to ensure that all parties abide by the contract and both parties will have a favourable outcome.
The goal of contract management is to keep both sides happy with each other so they can continue working together in the future while also looking out for any potential issues. Contract management can be intricate, especially when managing more than one contract at once or when there are many stakeholders to keep in the loop.
To help keep your contract management process steps as simple and streamlined as possible, use these steps every time you enter into a new contract with a client or vendor. Remember that this is just one of many different approaches to contract management, so if it doesn’t seem like it’s working well for you, adjust accordingly.
Contract Management Process Steps
The contract management process steps are as follows:
- Planning Contract Management.
- Preparing for Negotiation.
- Preparing for Service Delivery and Support.
- Executing a Performance Agreement.
- Managing Contract Performance through Measurement, Reporting, and Monitoring.
- Closing out a Contract.
- Evaluating the Experience and Lessons Learned.
Steps that you need to take when executing Contract Management Process Steps
Below are the steps that you need to take when executing contract management process steps.
The first step is to review the entire contract before signing. You should take care to read through all the conditions that apply and look at anything that could potentially affect your company’s operations or finances if not taken into consideration. A second important thing to remember is that you may want to consider hiring a lawyer specializing in this type of law or, even better yet, someone working specifically within your industry.
Once you have reviewed everything thoroughly and either made edits or agreed on changes, sign the document and make sure it is dated before signing. Lastly, contact the person or party that sent you the contract to inform them about your signature and date. Sometimes, once signed, these documents need to be notarized or translated, depending on where you live. In most cases, a signature from the responsible party will suffice.
Why are Contract Management Process Steps Important?
Every business owner should invest in contract management software that facilitates the process. Because small business owners are often limited in time and resources, contracts can be an area where they unwittingly neglect what’s best for their company. As a result, misunderstandings are more likely to arise, and some processes may take more time than needed because they didn’t follow specific steps correctly. It’s critical to monitor these relationships with your vendors, employees, partners and customers by documenting everything about them in the software for future reference.
When you need to provide service or make payments, it will simplify the process to see which documents have been reviewed or need revision and by whom. Some contracts require amendments regularly to reflect changing regulations and government policies. If you’re managing property leases, you would have specific requirements such as safety inspections and property reports that must be complied with before renewing any lease agreements. Contract management software ensures every step is taken correctly, so there’s no guesswork involved.
The software ensures you know when an agreement needs amending, when it expires, who’s responsible for reviewing and approving contracts, and who already has, among other essential details. The right contract management software also offers templates and wizards to streamline the contracting process. Automating this task means less opportunity for errors in your communications with external parties.
Components of Contract Management Process Steps
Contract management is a necessary process that should be completed when drafting a contract. This includes making sure the appropriate language is used to ensure both parties understand their responsibilities, outlining how any contingencies should be handled and following up with feedback from the other party. Here are some components of contract management process steps:
- Assess the objectives of the contract.
- Identify specific provisions.
- The initial draft agreement between parties clarifies expectations and establishes a mutual understanding of terms.
- Consider if there are uncertainties or significant risks involved in performance or progress so they can be addressed accordingly; what problems could arise that may jeopardize the achievement of the objective? How will you address them? What legal issues must be considered as well as regulatory concerns?
- They are developing scenarios. What are the possible outcomes for each scenario? Is this situation favourable or unfavourable to your goal, and why? What do you want out of this contract besides the primary benefits?
Do not forget the obligations imposed on each party by law and whether those obligations might conflict. If so, consider renegotiating parts of the agreement until all parties agree on which duties should take precedence over others. What happens if a change occurs after signing it? The best way to handle this is to review the contract annually and make adjustments as needed. It’s also essential to check for compliance with regulations. If something does need changing, make these changes in writing before the next annual review date.
The contract management process steps are a crucial part of any business. By following the steps outlined in this article, you can ensure that your contracts are managed effectively and efficiently. From negotiating and drafting the contract to tracking and renewing it, each step is important in ensuring that your company’s interests are protected. By following these steps, you can streamline the contract management process and make it simpler and more effective.
Read More . .