Contract conclude all business contracts. To minimize the risk associated with managing contracts and to establish strategic partnerships, contracts go through several phases of the lifecycle of a contract.
Contract management has assumed an increasing role in day-to-day tasks. Naturally, this happens when businesses strive to increase productivity without increasing the number of employees. As the amount of contracts involved in transactions in business grows, contracts are required to help save time and not take more of it.
Being aware of the management of contracts reduces the time you spend on administrative work. In addition, you can use ContractSafe online contract management software to accelerate and simplify the contract.
These are the most important phases of contract management.
The Planning Stage
Before you begin implementing the process, you need to design the best system to meet your company’s needs and its resources. To keep everything well-organized and streamlined, it’s also essential to create contract management procedures that can be used across the entire company.
Your contract management plan is a flexible plan of action consisting of procedures that cover every kind of contract for the business, including standard employment contracts to the documents that come from extremely specific and complicated contracts.
Create The Contract
In-house lawyers or counsel is recommended in the event of doubts. It is better to use a pre-set template created by the legal department to ensure that all the details are up-to-date and that all the necessary clauses and terms are included.
When writing or drafting the contract conditions, it is important to pay attention to the specific terms and phrases. Uncertainty in the contract leaves it open to interpretation, as low as the one-line comma. The laws of the country and state also have to be considered. This is particularly important if the two parties reside located in different places.
In the negotiation stage of a contract, which is arguably the most crucial phase of the contract’s lifecycle, parties discuss the specification framework created during contract authoring. After the back and forth redlining process and collaboration, the agreed-upon conditions and terms provide an accurate picture of the expectations of the contract parties.
When everyone is happy with the agreements reached, the contract goes through a second draft, which both parties review. Contract approvals should be based on an overall approval process in that they bounce around between the parties. The distance along the line of control that the approval is required to go will determine the duration of the approval process.
After the parties have been able to agree on the agreement reached, an end-of-contract review is carried out by all parties involved. It is a time to set up the parameters to comply with compliance requirements, standards, important dates, milestones, and particular terms of the contract.
To ensure a successful contract approval process, contract parties must keep the most current and accessible records of any changes added to the agreement. Therefore, audit trail records created by the most popular CLM software are essential. (CLM) software is crucial for efficient lifecycle management of the contract.
Make Sure You Sign the Contract
The signing process should be the most straightforward element of an agreement. The parties are in agreement, and the contract is written precisely; then, the following step involves signing it.
There are many companies that sign agreements across the nation or even across the globe, and getting signatures isn’t always as simple as having a meeting in person. Particularly when deadlines are short or time zones don’t match, and overnight mail or email might not be the ideal method to secure signatures more quickly.
An online, legally binding signature (e-signature) can resolve the above issues and allow you to make faster progress. Additionally, it speeds up the process of signing and generates revenue.
Contract Performance & Analytics
What happens post-signature is equally important and perhaps even more crucial than pre-signature if the contract is live. Therefore, it is vital to understand how the contract is working. The contract lifecycle can last for a long time and usually includes a variety of milestones and obligations, as well as payments, rebates, discounts, and so on.
Knowing these, tracking the assignments, and completion of the tasks are crucial to realize the maximum value from the contract terms. Also it is important to assessing the potential risk throughout the contract’s lifecycle. As the changes in regulations or the business’s structure, certain contracts may have modifications to accommodate changes in the business environment.
After the contract is signed, all parties agree to the responsibilities they have agreed to, such as milestones, contract-specific delivery dates, key dates payments windows, and any other contract obligations. When tracking the contract’s obligations, be sure to track tasks assigned as well as tasks escalations (to ensure that tasks are completed on time) as well as key dates for an obligation and milestones in obligations and task approvals spending management, and many more. A one-stop central CLM system to manage contract obligations can help to avoid contract violations and other dangerous consequences.
This step is in conjunction with obligations. It is agreed that, in addition to the terms of the contract, all general and particular contract guidelines, rules as well as guidelines, standards, laws, and procedures are adhered to. Effective compliance management for contracts can help reduce costs for litigation, late charges, and bottlenecks while also helping to lay a solid base for future contracts.
The final stage of the contract lifecycle can be different based on the kind of contract. Contract renewal can be possible when the relationship between the parties is mutually beneficial, and the parties wish to stay in contact and continue to do business with each other. Instead of having to go through all the previous steps of a new agreement, parties have the option to reconsider discounts, negotiate conditions, and take advantage of more opportunities.