What is contract management?

Contract management sounds heavy and vague to many. But what does this mean?

We will therefore first start with a general definition.

“Contract management is the structured storage and maintenance of contracts and associated information.”

Contract management is part of contract management.

Its purpose is:

  • Provide the internal organization with sufficient insight into current contracts
  • Providing the correct contractual agreements and information by keeping appropriate administration.

Contract management is an important pillar in reducing risks and making optimal use of certain attributed benefits.

It is crucial that information must be up-to-date and available to all involved and / or authorized persons.

In larger organizations, contract management relieves purchasers of standard administrative processes.

Contract management is very time consuming, but that does not outweigh the many benefits it brings.

What is the difference between contract management and contract management?

Contract management is part of contract management.

Contract management in turn is part of information management. Powerfully summarized: the right contract details must be available to the right person at the right time. Contract management ensures that the right information can be found in the right place at the right time and serves to support the entire contract management process.

What is the purpose of contract management?

Sound contract management focuses on 3 major pillars:

  • Closing contracts: making good agreements and reducing uncertainties
  • Executing the agreement: ensuring the correct performance in accordance with the concluded contract
  • Terminating contracts: at the best time for the organization

5 benefits of contract management

a) Digital contract management: all information available anytime and anywhere

With every contact with suppliers you have all the information directly at hand. You can grant colleagues access so that they can consult the necessary information. This offers enormous time savings.

b) Contract authorization: clarity about who is allowed to do what

By only confronting errors and exceptions, the internal organization is relieved. Errors such as incorrect indexation are noticed more quickly.

c) Contract matching: automatic linking of recurring payments

The use of contract matching software ensures that incoming invoices are automatically linked to the contract payment schedule, eliminating the need for approvals from an authorized person.

d) Billing monitoring

For certain items, such as website maintenance, budgets are usually set in advance in large companies. When an invoice for that particular item with a different amount comes up, the system will stop it and at the same time send a notification to an administrator.

e) Contract management saves money

By focusing only on the exceptions, the internal organization saves a lot of time. Since deviations are immediately detected, such as an invoice that was not planned or an invoice with a higher amount than agreed.

When setting up this process, you are forced to critically approach the subscriptions / obligations. In this way, double costs are avoided, you will also be notified in time by means of a notification when a contract is about to be automatically renewed.

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