In this article, we are going to explain the terms contract management and contract management software in a practical way. Afterwards you will understand the advantages of this powerful tool that bundles and optimizesmanagement tasks in a well-organized manner.
What is contract management?
Before we go deeper into contract management software, you should first understand what contract management is and how such software can contribute to optimal contract management. We can also keep it a bit simpler and use the term “contract administration”.
Contract administration means: “Managing all contracts with everyone involved in the company”. This also includes negotiating the contract terms and conditions and establishing those terms in the contract. This is to ensure that the parties signing the agreement will also comply with these conditions.
There are many types of contracts. In business content, these are the most common:
- Sales contracts
- Partnership Agreements
- Trade contracts
- Intellectual Property Agreements
Contracts are protected by the legal form in which they are drawn up. They are prepared in accordance with the rules of the respective company and the laws that apply in the respective country for processing personal information. In short: the variations are countless.
Contracts can be changed when there are new business agreements or renewals. These things, in most cases, force contract changes to keep everything legally covered and correct. Logically, this leads to a mutual decision about which adjustments are needed. Only in this way can the agreement remain in force and remain active in the organization.
The starting point is to be able to follow up the processes of drafting and analyzing contracts in a systematic and efficient manner, to optimize the financial and operational scope and to minimize the possible risks.
Successful contract management
It is crucial to have the recruitment process carried out by qualified people, but in order to achieve good results and to be successful, this process must be supported by contract management software.
In principle, it should produce the following results:
- Business return and financial benefit
- Partnerships with suppliers tailored to the needs of the business
- No contractual incidents
- All stakeholders are satisfied with the services provided
Phases of contracts
There is a distinction between the contracts and the associated processes.
1. First application
The contract management process must identify which documents are required to determine the purpose of the contract.
2. Draw up a contract
The contract should be drawn up in a systematic manner.
3. Negotiate contract
Now that the contract has been drawn up, the parties involved can discuss the contract and share their views on it.
4. Approval of the contract
Certain decisions need to be made regarding the contract so that it meets the intended (SMART) objectives.
5. Performance of the contract
This is where the finalsigningof the contract takes place by all parties involved.
6. Managing obligations
The entire process is coordinated and executed based on the agreed objectives.
7. Changes and Revisions
In case of problems or gaps in the process, the contract should be revised and adjusted.
8. Evaluation and reporting
Evaluation of the progress of the project is crucial to determine whether or not the agreed objectives have been achieved within the company.
9. Refresh
The ability to renew, amend or create an entirely new business contract.