Successful contract management isn’t always easy, especially when you hold multiple contracts with the same vendor. But, if you want your business to succeed, your employees to stay happy, and your client relationships to continue, then strong contract management is a must.
Fortunately, the days of sticking paper copies of contracts into a filing cabinet are behind us. And it’s a good thing, too, because it’s so much easier to keep track of important details of your contracts, such as expiration dates and mutual obligations, when you can use software to help you.
Keep track of when your contracts expire, and what they have to say about handling disputes and other issues. Format and structure your contracts appropriately and be prepared when it’s time to exit a contract. When you have multiple contracts with one partner, understand how they interact and how you can fulfill the obligations of each. When you understand these five crucial aspects of contract management, and have the right contract management software and solutions, contract management can be easier than ever before.
1. Contract Duration
Contracts aren’t just about establishing legal obligations in a partnership; they’re also about building relationships with suppliers, vendors, clients, and others. Contract duration is vital to fostering good relationships.
That’s because no contact should be implemented without clarifying expectations on both sides about how the contract will work in practice, and part of that is building in the space to step back and reevaluate the terms of the relationship. While you don’t necessarily need to write a definite term, or start and end date, into your contract, not including one could introduce ambiguity that could allow one party to challenge the validity of the contract. End dates give all parties concerned the chance to reconsider factors that could influence the terms of the contract, such as changes in the market, costs, and how easy it is to find a new relationship with another organization. With an end in sight, no party is trapped into an agreement that could deteriorate, over the years, into an unfavorable one, due to changing conditions.
2. Handling Issues
Signing a contract is just the beginning of its lifecycle. Your contract should also include provisions for handling production problems and other issues that might arise. Effective contract management takes into account the need to monitor and review performance throughout the contract period. This helps you address issues before they become serious and ensures that all parties uphold their parts of the bargain. Not only that, a well-written and diligently followed contract can help you more successfully navigate difficulties that may arise.
3. Structuring the Contract
The format and structure of your contract is important, not only to its enforceability, but also to interpreting expectations and understanding how you want your relationship to function. Contract management begins with the contract’s format, and structure, which can help in clarifying key performance indicators (KIPs) and turning them into contractual obligations.
4. Planning Your Exit
No matter how good your relationship with your employee or business partner is right now, it could fall apart over time. Establishing an exit strategy can give all parties to the contract the confidence of knowing that there are circumstances under which a contract can be annulled, and it can also protect you from litigation.
Letting contract expiry sneak up on you can really limit your options when it comes to negotiating favorable terms of renewal. Good contract management lets you know when contracts are coming up for renewal, with enough time to negotiate those good renewal terms – or plan for an end to the relationship.
5. Juggling Multiple Contracts
If you have multiple contracts with a single supplier, client, partner, or other organization, you need impeccable contract management to keep track of the terms of each, including start and end dates, KPIs, annulment considerations, and more. You need to have regular reviews to make sure contract expectations are being met, and if you can present a united front towards those entities with which you have multiple contracts, you’ll benefit from even greater leverage.
Does your contract management strategy involve signing the contract and throwing it in a drawer somewhere? It’s time you modernized your contract management. With contract management software solutions available to companies of all sizes, there’s no reason why you can’t get on top of your contracts, instead of letting them get on top of you.