At the heart of every business, without exception, is a process for the management of contracts. Whether this process is refined or thrown together can make a vast difference to allocation of time and resources spent addressing each of these five issues in manual contract management.
5 Issues in Manual Contract Management Addressed
1. The legal team is inundated with submissions and requests for new contracts
Large companies especially suffer from this issue. The best example is a company with a central legal department, a large operational segment. Imagine several regional managers bringing in different contracts — some for HR, some for building permits, some for new sales — the list goes on and on.
With a central legal department of 7 – 10 people, all of who are receiving different types of contracts for different areas, and have different core expertise, the lack of a systematic process results in ad-hoc management of the most essential documents to a business, rather than a proactive approach in which the organization remains in control.
One way to solve this issue is by setting up a request system. An extremely valuable tool to help creating this process is the free contract request form. If all the regional managers filled out the same form, they would have a clear idea of what items the legal team needs and which details to take into consideration upon making a request. Also, if the legal team is accustomed to receiving these requests, and one ends up with the wrong item, they can quickly look to the form field that indicates the department, type of contract, etc., of the correct legal specialist. This process saves an enormous amount of time and effort for your legal teams, and familiarizes all of your contract submitters with the same requirements and structure.
2. Those making deals waste time making phone calls and emails to check statuses of other contracts
Employing business intelligence at this phase such as a dashboard in the company intranet would allow different regional managers to check for updates on multiple contracts in one place, rather than making phone calls and sending emails to different legal specialists, costing valuable time. To read about the benefit of implementing business intelligence and dashboards for Contract Management, read this page.
3. Contract revisions and edits are lost in different versions in multiple locations
There should only be one approved version of the contract at all stages of the process. If multiple copies are distributed in multiple emails in a misguided attempt to save time, that one version will quickly be lost in a swamp of confusion and verification that will probably end-up taking much more time than you could have ever saved with the scatter-gun approach.
4. Renewals and obligations are not tracked, costing organizations recurring charges, and revoking the ability to re-negotiate terms
Some businesses keep track of their contracts in file cabinets with sticky notes. Some have a smoother system of using programs such as Microsoft Excel or One Note to keep track of contract metadata. But in both these scenarios, the manual effort relies on the person managing the contracts to be present and actively involved in updating the list. The most effective way to manage this system is to set up a contractual obligation alert system for notifying a contract manager and the owner of the contract early enough before the expiration or obligation due dates.
5. Amendments and supporting documents are not “linked” and may be housed in separate locations
When an amendment to a contract or another supporting document is created, the same people involved in the original contract should remain involved with any additions to the contract. One way to ensure your contracts are organized is to follow the best practice of categorizing them by the group within the organization that this contract is in reference to, and then the type of contract.
For example, the first layer of organization for a particular document may be “California,” and the sub-level “Sales.” Redesigning your organization structure in this way allows easy location of documents, and a clearer understanding of where a supporting document should be housed. The quickest way to ensure your amendments follow the terms of the original contract and are approved by those that were involved, is to use this workflow software that allows you to add amendments to specific documents, linking them together, and automatically keeping them stored in the same location.
The best approach to the refinement of contract management efforts, and one that is most valuable, would be using an automated contract management system, such as the one offered by ConvergePoint, that operates on top of SharePoint 2010 and 2013. Most companies use SharePoint, and this type of solution: (1) allows the company to have control that most vendors do not offer; (2) enables companies to get up and running faster with a tool they’re already familiar, reducing deployment and training time; (3) allows for greater functionality and configuration; and (4) enables companies to maintain full control of their files and keep them in the same file formats in which they were created.
CONTRACT MANAGEMENT – BEST PRACTICES
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