The Stages of Contract Management You Need to Know
Many businesses are using contracts with external organisations to fulfil tasks that traditionally would have been completed by employees. This allows them to avoid the costs of taking on more staff.
Contracts are supposed to save a business time and money, but if the contract management process is not automated, it can do the opposite. It simply generates more administration.
According to the Small Business website, the owners and employees of small businesses are spending an average of 120 working hours a year working on administrative tasks. This adds up to nearly six per cent of staff time being tied up in ‘back-office’ tasks that could be dealt with by efficient systems.
Here’s how you can save time and money with contract management.
Prepare the Contract
Before you set the contract up on a system such as that supplied by https://www.contractswise.com/, you need to be organised. Start by identifying your business needs and ultimate goals.
Define the risk that the contract exposes you to, for example, if the other party files for bankruptcy or sells their company.
Author and Negotiate the Contract
Your legal team can draft the contract, paying attention to specific wording and avoiding all ambiguity. Then negotiate with the other party to make sure that they are happy. Make the negotiations transparent and try to save time by anticipating their needs.
This is where a contract system starts to be useful. All parties can view the document and make changes and collaborate in real time.
Obtain Final Approval and Execute
Once the document is agreed, it needs to be approved and may have to pass through the company procurement procedures. An approval workflow can be set up in the contract management platform.
Getting the final signatures should be easy, but with businesses operating globally and in different time zones it is not always that easy. A legally binding electronic signature on a contract management system simplifies and speeds up the process.
Amendments and Auditing
Signing the contract is only the start. Revisions and amendments have to be made as the contract starts to operate in real life. A contract management system can track changes reliably and record edits.
Regular audits will ensure obligations on both sides are met. Deadline alerts can help to avoid lost revenue.