5 Simple, Proven Ways to Improve Contract Management
Contracts are vital for your business's efficiency, as well as safety.
Back-office operations are crucial for keeping your company running smoothly, and adequate management of your business’s contracts will keep your efforts on track, helping your team hit deadlines and improve productivity while also reducing liability concerns.
When applied at scale, improving your contract management can completely transform operations at all levels of the business. Here's how to do just that.
1. Evaluate what is (and isn’t) working with your current system
Without a clear plan of action, you’ll have a hard time implementing meaningful change. Start by performing a full evaluation of your current contract management process. You might be surprised at where bottlenecks and inefficiencies — and even potential liability concerns — appear.
Once you’ve clearly identified the issues that exist within your current contract-management system, you can develop a meaningful action plan to address them. When developing your strategy, be mindful of your company’s actual needs and budget so your strategy can be custom-tailored to your unique circumstances. Setting quantifiable goals related to needed changes can also help put things on track.
2. Use contract templates
One of the most common issues that occurs during contract management is when a company drafts up a brand new contract for every vendor or client. This isn’t just inefficient — it can also lead to inconsistencies that increase your potential liability risk.
Contract templates should use standardized, jargon-free language. While you will need to develop different templates for different purposes (such as hiring an employee vs. onboarding a new client), you can essentially create a series of “fill in the blank” contracts for each need.
Instead of needing to create a new contract from scratch, you simply change the relevant names, dates and data for new contracts.
Related: Bulletproof Terms for Every Contract
3. Discard outdated contracts
In a blog post, corporate-governance software provider ContractZen explains, “It’s not that uncommon for companies to have several versions of contract drafts and annexes running around during contract negotiations. Therefore, it is imperative for you (and for your technical experts) to make sure that the latest versions of all the documents are the ones that are included in your contract material.”
When working out the details of the contract, this could also unnecessarily extend the negotiations period. Continually sending over the wrong version of a contract will also reflect poorly on your business, which could cause you to lose a potential client altogether.
4. Automate whenever possible
The larger a company becomes, the more challenging it is to track legal documents. With service agreements, non-disclosure agreements, contractor statements, vendor contracts and more, the sheer amount of paperwork that the average business needs to manage can quickly become overwhelming.
As with so many other areas of doing business, automation is key to managing these and other contracts. Automated tools are used to digitize many of the contract management tasks that once needed to be done in-person. Instead of holding a meeting to review and sign a contract, the latest version of the contract can be sent digitally. After the contract is signed, it is automatically sent back to your team for final review and approval.
Such tools reduce administrative errors (such as duplicate signings) and allow every aspect of contract management to be completed much more quickly. Many of these automation tools also offer features such as cloud storage and real-time collaboration to further streamline contract management.
5. Keep reviewing your plan in the future
As technology and legal requirements continue to change, so too will your contract management needs. Updated regulations could require a complete revamp of your existing contracts. To avoid potential liabilities and keep your system future-proofed, it is wise to review your contracts and management process on a quarterly or annual basis.
It may also be helpful to outsource these periodic reviews of your contract management process to an expert consultant, who can identify issues your own internal team might otherwise overlook.
As Julia Fournier explains in a blog post for contingent workforce tool HCMWorks, “A consultant can provide you with the guidance, assistance, advice and recommendations you need to streamline your contract management process, reduce costs, improve compliance, reduce risks and increase efficiency."
Making the most of contract management
By implementing these best practices, you can ensure that contract management doesn’t become a headache that slows down your business operations. Instead, it can become a seamlessly integrated part of your normal activities — one that enhances your team’s productivity and, most importantly, your bottom line.
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