During any contract management process, there is usually a framework in place for the management of key elements of a contract lifecycle. If a business or organization is already implementing the best practices for contract management, there may not be an obvious area for improvement or to accelerate the process. If, however, a business or organization has poor contract management, then there will be numerous areas during the lifecycle of a contract where improvements and streamlining can be made. Regardless of where a business is currently at in terms of their contract management, there are several key procedures and practices that can be implemented to accelerate the contract management process, improving both productivity and efficiency whilst increasing contract value and business revenue.
Create an Implementation plan
Developing an implementation plan has many benefits for contract management. By outlining and defining each stage of the CM process, you have a starting framework and strategy for the future and it can hugely accelerate the entire process.
By creating a specific plan, it ensures that everyone involved in the agreement, from the team negotiating the contract, third parties and the team that will be responsible for the continued management of the contract, have clear and detailed knowledge of not only their role in the process and their responsibilities, but an understanding of the contract and the expectations of it’s value and performance.
There should be clearly outlined definitions including:
- Roles & responsibilities
- Contact information
- An agreed level of management according to value/risk profile
- Contract objectives
- Performance Management Framework, e.g., KPIs
- Obligations, e.g., Dates and Deadlines
- Contract Compliance
- Review meeting schedule
- Risks & issues
- Exit strategy
Set Key Performance Indicators (KPIs)
KPIs are one of the best ways to ascertain the value of a contract further into a contract lifecycle. By having clear performance goals, all the parties involved in a contract can measure where contracts and third parties are performing as intended, or failing to provide the necessary services and deliverables.
A business can include any KPIs that they feel are important, however to accelerate the contract management process and improve the overall efficiency, we would recommend including the following:
- Timelines and timeframes for services and deliverables
- Quality of provisions
- Contract length
- Contract Value
Develop Contract Templates and a Standardized library of terms and vocabulary
Creating contract templates can make the initial stages of the contract lifecycle far more efficient. Having commonly used, pre-approved templates with clauses and terms that can be regularly updated or configured, not only improves productivity, and can accelerate the contract process by reducing the time it takes to draft an agreement or contract, but can help with regulatory compliance. Having a set of standardized contracts that you can utilize and configure to your specific requirements and relevant industry is a vital aspect in accelerating and improving productivity in contract management. Especially if your business is managing a high number of contracts.
Having a library of standardized terms and clauses can help identify any contracts that may include particular provisions, indemnification clauses for example, which will help your contract lifecycle later in the process and leave your business less open to costly mistakes.
Implement E-signature software
If you want your contract management to be successful and the process to be accelerated, implementing e-signature software may well be a crucial element for your business in moving forward. The approval and signature process has traditionally been a long one, but with the rise in popularity of digital ID, e-signature software has made it easy to collect and store signatures, helping to quicken the contract approval process as well as adding an extra layer of security.
Use a Contract and Documentation repository
Once contracts have been negotiated and signed by all parties, it is essential that all corresponding data and documents are stored in an accessible yet secure location. Due to the advancement in technology, it is simply no longer practical or efficient to store information together physically, or even, as most companies now do, across various databases. Often the amount of documentation and information required for each contract plays a large part in slowing down the contract management process, which can be hugely inefficient when trying to maintain business growth and productivity! Plus, if your contracts are spread over several shared document sites, the risk for loss and human error is understandably high.
The solution to this and to keep the contract management process running smoothly, is to have all your contracts stored in a central repository. This allows for easy access to contracts by teams dealing with their ongoing management, and by streamlining all the individual contracts and associated data, businesses can have a tighter control of the contract process and reduce the risk of mistakes that could potentially cause harm to business reputation and revenue.
Contract management and the associated administrative processes can also be accelerated by utilizing available software, such as the software offered by Symfact, thanks to the integrated, advanced search functions and tagging features. By using metadata to search contracts for key words and clauses, information can be identified quickly and easily, making contract management efficient and optimizing the time and resources of the contract management team.
Successfully accelerating your contract management process means a contract lifecycle must be tightly controlled by the contract management team, which includes operating the best practices at every stage. To implement best practices and improve and quicken the workflows involved in the contract management process, there needs to be continual contract reporting. By continually managing your contracts, either manually or by using automated software, you are less likely to miss the end of contracts, renewals and by using the KPI’s set earlier in the contract lifecycle and analysing operational data and workflows, you can have a complete overview of where improvements can be made to accelerate and smooth out your contract management. Regularly reviewing all the available reporting data can also help your business plan for future agreements by helping to predict any possible future risk and guarantees a quick response to current trends and any issues that arise during the course of the lifecycle such as bottlenecks in the system.
Continuous reporting is also vitally important in terms of compliance. In terms of the contract itself, compliance to fulfilling the contractual obligations for all parties involved needs to be regularly reviewed, if the KPI’s set at the beginning of the contract are not utilized, it will slow down the process and a business cannot ascertain the value the contract brings or whether third parties involved are compliant with the requirements and performance set out in the contract.
In regards to internal compliance, by continually reporting on and tracking every step of a contract, including milestones or changes made, you can hold everyone involved accountable for their actions, reducing long investigations, improving efficiency, and helping to give businesses some protection against non-compliance.
By adopting this element of contract management, you can identify issues with the framework and system and help improve your practices and accelerate the contract management process.
Utilize Contract Management software
If you want to accelerate your contract management process and have successful contract lifecycles, it is essential to use any of the tools or software available to your business. With the increase in extended enterprises as businesses expand globally, there is added pressure on businesses to improve profitability. Around 9% of revenue is lost due to poor contract management, so by adopting end to end contract lifecycles, and an organised, data-driven approach to contract management, there are financial benefits for your business.
One of the main tools available for businesses managing many complex contracts is contract management software. Using this software means that at every stage in a contract lifecycle, a business can automatically digitize, create, monitor and manage their contracts.
CM or CLM (contract lifecycle management) systems and software can offer a centralized platform for storing documents and data and a framework for standards and control procedures. Software can have integrated features such as intelligent questionnaires, a browser-based central repository and trigger-based alerts for milestones and events, which can accelerate the contract management process by automating the entire contract lifecycle. Whilst the automated reporting feature can track important information with a complete revision history, which allows businesses to see how contracts have changed over time. You can also keep on top of all compliance management and processes by using the custom reports feature, which allows you to analyze operational data, workflows, and information.
Accelerating the contract management process with content creation, managing commitments, KPIs, continuous reporting, better resource planning and electronic signatures, really can make a positive impact on your business, so if you want to utilize the tools available, including contract management software, then contact us at Symfact and start your journey towards successfully managing your resources and efficient contract management.