The Ultimate Guide to Simplifying Your Contract Management

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Contract Management is a complex process, even for smaller businesses. The task of keeping control of deadlines and milestones, requirements and obligations, roles and responsibilities can quickly become unwieldy and overwhelming as soon as the business begins to grow and expand. This is because contracts intersect with all aspects of the commercial operation – right from the earliest days of launching. Incorporation, employment, property hire or acquisition, procurement and shareholder agreements all form a part of the most basic, foundational legal contracts for business, before the very first sale is even made. Each of these very different types of agreement need to be fulfilled on time, and to the right specification.

Then, there is risk. Every contract brings with it an increased element of risk to the business – to its finances, its reputation and its long-term prospects – because each contract represents a connection with another party. Whether that other party is an employee, a stakeholder, a customer or a supplier, the connection that the contract builds with them is a point of vulnerability for the business. Any failure of compliance on the part of the other party can have a significant impact on the business itself. For this reason, risk management protocols are an important part of Contract Management and add to the complexities of the processes involved.

In the broadest of strokes, the complexity and challenge of Contract Management stems from the fact that contracts are administered through a Contract Life Cycle. This is the term used to collectively describe the distinct stages that define the duration of any legal agreement. Beginning with the contract request stage and moving through negotiation, creation, approval, execution, monitoring and compliance, and renewal or termination, the Contract Life Cycle requires careful planning and continual assessment in order to ensure quality of service and the enhancement of the business reputation.

The benefit of simplifying Contract Management

It is the fact that contracts intersect with all aspects of the commercial operation that makes simplification of Contract Management so beneficial to business. Improvements made in these processes are very quickly disseminated throughout the enterprise. Simplification leads to greater efficiency, so increased efficiency in the area of Contract Management builds efficiency in all other departments – from Human Resources and Accounts to Procurement and Sales.

Efficiency also contributes to scalability, and this is essential for all modern business. Technology has made the global marketplace much more accessible while challenges in environment and public health have increased market volatility. In order to secure a future, businesses must now take steps to insulate commercial operations against fluctuations in demand, supply and circumstance, and this is much easier to achieve with an efficient business model.

The ultimate goal is always improvements to the bottom line, of course, and when a business is operating efficiently, gains are made in terms of profitability. Resources are deployed in the optimal way, there is less wastage and less incidence of delays and financial penalties. All of the issues that would otherwise serve as a drain on revenue are addressed and ultimately rectified by the achievement of full efficiency across the board. The fastest and most effective way to reach this status is through the simplification of the Contract Management process.

How it’s done

Simplification of Contract Management processes is all about streamlining. It’s all about keeping processes under strict control; ensuring quality while also creating a culture of proactivity, rather than reactivity. Once the Contract Life Cycle is streamlined, issues that would otherwise threaten to derail the process or drain valuable resources can be tackled early with any necessary remedial action taken. While Contract Management itself is complex, simplification can be achieved with just four main steps.

  • Centralization

Contracts intersect with every part of the business, which means that it is easy for them to become scattered throughout the operation, with each department storing documentation relating to legal agreements. This makes Contract Management difficult and time consuming, because the first task is always to find the documentation that is needed. By centralizing all contract documentation, the process is immediately made more efficient, with that task of document location being made quicker and easier. Centralization also boosts data security for the business. When documentation is scattered through various departments, with each department responsible for the secure storage of the information, it can be challenging to ensure that all departments are adhering to security protocols. Storing documentation in one location means that all access and activity can be tracked and logged – increasing accountability and transparency while also supporting compliance.

 

  • Standardization

Having centralized all contract documentation, it is essential to implement a standardization policy. This means that the business must formulate and agree standard terms, conditions and clauses that reflect the goals of the operation and the values of the company. This standardized language can then be used to form templates for contracts and clauses which can be made available as part of the centralized contract repository. Consistent standardization promotes efficiency by speeding up the contract creation process, and therefore shortening the sales cycle. This means that profits from each sale are seen sooner, while resources are freed up quicker for further sales to be made.

In addition to increasing the flow of revenue, standardization supports compliance. When standardized templates and clauses are formulated and approved by stakeholders and the Legal Department, the business has the assurance that the agreed language complies with all internal and external regulations and requirements. This is a significant risk reduction measure because it reduces the likelihood of contractual conflict or dispute.

 

  • Categorization

With contract documentation centralized and standardized, it is important to then categorize the collection in order to streamline Contract Management processes going forward. Accurate and consistent categorization ensures that the contract collection remains fully searchable, transforming it from a collection of documents into a valuable data source. In order to categorize the contract collection, the business must first agree the specifics of what information should be tracked in order to fully harness the data in a way that is appropriate to the needs of the business.

Having arrived at this agreement, a data tagging policy should be implemented, providing guidance for the use of metadata and data tags across the contract collection. When this is applied alongside standardized terms, conditions and clauses, the entire contract collection can be filtered to address any question or situation. For example, in situations such as the LIBOR transition, a categorized contract collection can be filtered to surface those contracts that require remedial action. At the same time, business continuity or expansion plans can be informed by filtering the contract collection using a variety of categories, to provide data analytics to any level of granularity.

 

  • Automation

Technological advancement has made the simplification of Contract Management easier to implement, and faster to achieve. Effective Contract Management is a blend of administrative processes and informed decision-making, and by introducing automation into that equation, the entire Contract Management system becomes streamlined. Automation can perform the administrative tasks involved in Contract Management, including those that support the making of informed decisions. These tasks include workflow management, the creation of audit trails and the application of powerful reporting tools for data analysis.

The use of automation in Contract Management increases efficiency in several ways. Firstly, automation is an important aid to risk management, because reducing human input into the system also reduces the likelihood of human error. Mitigating risk in this way helps to eliminate the incidence of delays or financial penalty, thereby helping to boost the bottom line. Secondly, automation helps to increase levels of compliance without the need to reassign resources. Automated workflows ensure that the right task is flagged up to the right person at the right time, so deadlines and obligations are consistently met. Automated audit trails ensure that accountability and transparency are increased, all activity is tracked and recorded, and data security is prioritized. Thirdly, the Contract Life Cycle is shortened due to the streamlining achieved with the automation of processes. Crucially, the system is able to better withstand human absence as well as being improved through the reduction of human error. This boosts business continuity and scalability, as well as commercial resilience.

Contract Management Software

The simplification of any Contract Management process needs a solution that is easy to implement, and easy to use. Contract Management Software platforms, such as that designed by Symfact, is such a solution. It delivers the necessary tools in a single product – specifically designed to encompass the entire contract life cycle. Streamlining the Contract Management system in this way creates a high level of efficiency at the heart of the business, which is then quickly distributed across the operation.

Symfact’s Contract Management Software is fully customizable and configurable to meet the exact needs of the business. This promotes effective Risk Management and full scalability while also ensuring that the platform is easily integrated with existing systems. Contact Symfact today to arrange a software demonstration and learn how to boost your business by simplifying your Contract Management.