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How to Simplify Contract Management Lifestyle

Companies / SME Oct 29, 2018 - 08:53 AM GMT

By: Sumeet_Manhas

Companies

Negotiating contracts effectively is essential for business success. The details in the contract you negotiate will specify the details for all the transactions you make. Making a single misstep can have huge financial implications for your business.

Historically, the management of contracts was an ad-hoc process. Since the details were recorded on paper, various clauses in the document were often overlooked. That's not the case anymore!




The advancements and changes in the contract management lifecycle are notable. These changes have made an impact on how a business engages in trade. Technological changes have made  it possible to automate all the processes in the company. This allows for ease of documentation and retrieval.

  • The Contract Management Process

One of the most challenging aspects of negotiating  a contract is finding a common ground for all the parties. Fortunately, that's the intent of creating a contract. When negotiating a contract, you'll have to involve a number of parties that are both internal and external to the business..

The internal parties will represent your business. They'll include the sales, legal and finance departments. All these departments may or may not send a representative to the negotiation. If they do, they should speak in one voice at all times.

The external parties include representatives from the company you want to do business with. Such may include the vendors, suppliers, clients, distributors, freelancers and employees.

A successful negotiation is underpinned by arguments on the basis of a give and take transaction. An effective contract management process should be able to integrate the needs of all parties- internal and external- before coming to an agreement

Once the parties reach an understanding, a document should be generated. The parties should go through the document before proceeding to the next stage.

In automating the entire process, its effectiveness depends on how well these factors are integrated. The needs of external and internal parties, the contract template, the management software as well as the actual contract all need to be integrated in order for automating the contract lifecycle to be successful.

If you intend to build an effective contract management process, you'll need to plan to implement both design and standard procedures. These procedures should consider all the foreseeable and unforeseeable events that arise when creating a contract.

  • How to Build Your Process

Do you want to create a contract management process? Well, you may need to identify your internal and external parties who have a role- no matter how small- in creating the contract.

Which internal departments will be involved in the process? Will they be participating or making observations? For instance, the finance department needs to be present to authenticate the purchases you make.

Forge ahead and categorize all the external parties you expect to be present. Here, you can account for the differences that are likely to recur in the process. Use a contract template to make this possible.

Once you identify all the parties to this negotiation, define their roles and activities in the process. Where possible, identify the person responsible for each task and when they'll be participating. With this, you can streamline everything from start to the finish.

For instance, your legal team may offer guidance at the start of negotiations. After this, they'll take responsibility for making approvals to the final contract.

  • Create and Use Templates in the Management Process

Identify the parties that will play a role in documenting the agreements you make. Doing so helps you get a foundation for your management process. After this, the next step should be the creation of templates to automate the process.

Before you start, you'll need to evaluate all the present contracting processes. After this, you can categorize the process by the following criteria:

  • The level of risk
  • The value added to your business
  • Whether it is a routine or infrequent process.

Measure every process against these factors to determine what the contract templates will look like. Where the risks are high, there is a high tendency for the negotiations to be done multiple times. As such, your outline should hat resemble a final contract with room for negotiation rather than the final product.

If the risks are not high, auto-generate the contract to save on time and money.

You can refine the template to cater for the specific clauses you feel will be renegotiated and the ones will remain unchanged.

By Sumeet Manhas

© 2018 Copyright Sumeet Manhas - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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