We'll explore the significance of properly managing your company contracts in this blog, as well as some crucial strategies for improving your own contract management.
What is Contract Management?
Contract management is the process of overseeing agreements from their inception to their implementation by the designated party, as well as the contract's final termination.
A contract describes the activities that both organisations will engage in and the parameters by which they will each perform their portions of the agreement when they want to conduct business with each other.
Due to the emphasis on income and costs, contracts have a significant impact on firm profitability.
The lifetime of a typical contract may be divided into two parts: pre-signature and post-signature, each with its own set of issues and duties:
- Pre-signature
- Post-signature
How can poor contract management affect my business?
Poor contract management may erode a company's revenues and profits, and there are a variety of events that can diminish the value in large and minor ways throughout the contract lifecycle:
- Protracted contract discussions might result in lost opportunities or the possibility of the deal falling through;
- Missed milestones, issues with deliverables, and the possibility of contract violation can all result in compliance fines, late fees, and other charges if contract performance is not monitored proactively;
- In the case of a crisis, contracts that are focused on incorrect terms and risks might result in inadequate protection;
- Failure to evaluate contract performance at the end of a contract, as well as to document and apply those learnings, can lead to recurring difficulties and underperformance, resulting in continued value leakage.
These are just a few of the many ways that failing to follow the best contract management practices may have a significant impact on a company's bottom line.
What can I do to improve on contract management?
It's vital to set up a time to enhance contract management. Many professionals fail to see the importance of this process, resulting in a slew of problems such as missed deadlines, increased liabilities, and missed opportunities for development, all of which jeopardise their company's success.
Here are a few essential suggestions for improving the contract management process:
Conduct a contract audit
You must first conduct a contract management audit to determine the issues that are causing your organisation's contract management policy to underperform.
A contract management audit is a comprehensive, company-wide examination of your present contract management strategy.
It should entail a thorough examination of all stakeholders, resources, and processes that now govern how you handle all sorts of contracts.
You can now begin to identify and solve flaws and holes in the contract management chain after you have a complete grasp of how contracts are being managed.
Formalise the contract management framework
The next stage in resolving underperforming contract management policies is to enhance your strategy based on the findings of the audit.
Contract management necessitates a systematic and organised approach at all phases, which is significantly easier to execute with a roadmap that can be applied to all contracts that develop within the organisation.
Remember to detail what needs to happen and who should be involved at each level of contract management.
Use technology
Contract management software can help you manage contracts more easily and simplify the process at every level, from finding the correct standard contracts to use for typical business agreements to reminding you to remain on top of each contract-related job.
There are numerous solutions on the market, and features and pricing models may vary, so take some time to evaluate the options based on the specific needs and workflows you've identified and developed.
Persona Finance is well-equipped to handle contracts, both in terms of developing new ones from start and revising existing ones. Please get in touch with us right away if you require our support at [enquiries@personafinance.co.uk].
