Contract management includes document management of employee contracts, customer contracts, and agency contracts. A comprehensive approach ensures reliable contract documentation. A solid contract shows a company’s commitment to its customers, which in turn strengthens the business relationship.
Establish the contract
The first step is to establish the contract. The collection of relevant data is essential. The department responsible for the contract identifies the goods and services that the potential customer needs. This includes product information such as product details, features, specifications, prices, terms and conditions, payment options, and promotional programs. The duration of the contract should also be indicated.
Draft the contract
The next step is to draft the contract itself. The contract writer should use the information gathered in the first step to draft the contract. The contract writer should assess the value of the contract not only to the company but also to the client. This step would be less complicated if the system were automated. Automated contract management will also reduce the number of disagreements and shorten the negotiation time.
Approval phase
Approval must then be sought from the company’s management or finance department. The approval phase usually slows down the process due to paperwork and bureaucracy. However, automated contract management can help speed up this phase. In fact, most good automated systems have electronic signatures to shorten the approval process.
Commitment management
The next step is engagement management. This phase increases the value of the commitment by ensuring that the terms of the contract are met. Commitment management also involves knowing when a contract expires and what its terms are. Automated contract management systems issue alerts about impending contract expirations, contract renewals, and other important events in contract management.
Compensation phase
The next step is the compensation phase, where the value of the contract is assessed to determine if it has been profitable for the company. If it has not been profitable for the company, it is time to change some of the terms and conditions of the contract renewal. With an automated contract management system, changes are not made manually, but the system suggests changes to make the contract more profitable. An automated system also makes better use of time, as contract entry is not done by digging through piles of files.
Auditing
Contract auditing is the process of evaluating whether the contract is correct and whether the provisions in the contract are being met. Without an automated system, this process is complex and time-consuming. A proper and reliable automated contract system has tools for reporting compliance, reporting, and easy access to reports.
Renewal
When a contract is up for renewal, the automated system notifies the contractor that the contract is up for renewal. At the same time, the automated system facilitates new contracts based on the previous contract.
Final words
Contract management is a time-consuming process. It can be particularly complicated in the case of complex contracts with highly technical content. Automating the contracting process is a practical and smart business decision that will benefit the company in the long run.
About Author
Sally Hickman Green is a 30-year-old who enjoys blogging for electronic signature, Administering Contracts, internet marketing, and social media marketing. She is inspiring and generous in blogging. She has a post-graduate degree in Computer science.
