What is Contract Management?
As the name ‘contract management’ suggests, contract management is the management of the contracts process with either customers, employees, partners, or vendors. Contract management is used for the purpose of negotiating the conditions and terms in business contracts. Compliance is ensured through contract management helping to ensure that the terms and conditions of a contract are fulfilled.
Why Contract Management Matters
When contract management is done efficiently, it proves beneficial to the success of the business and offers opportunities to automate recurring processes. There is value in automation and with properly executed contracts management, companies will find that this process is essential. In the ever-changing world that we live in, doing business must change as well. By becoming automated, the process becomes more efficient, faster, and easier.
In addition to process improvements and standardization, contract management also provides legal protection for both parties involved. Contract management consists of legally approved, legal playbooks, self-service portals, and electronic signatures. These items together allow businesses to make sure their contractual obligations are known and met by all parties.
The Stages of Contract Management
There are six stages to the contract management process. They include:
Initiation: The initiation process is when a company decides to enter into a contractual agreement with the other party. A need for a contract emerges at this point.
Negotiation: Any legal contract that begins always contains a degree of negotiation. It’s at this point that the concerned parties will meet in order to set the boundaries of the agreement.
Generation: Generation is the drawing up of the contract. This process takes all of the information agreed upon in the negotiation process and “puts it on paper”. During this process, a single template or full contract may need to be generated. Members of a legal team may get involved if the contract is required to be written up without a boilerplate starting point.
Approval: After the contract is generated, both parties must look at the contract and agree that the contract suits both of them. This is the approval process.
Execution: The execution process occurs once the contract is put in place. Once this is done, both parties are bound to comply with the boundaries put in place by the agreed upon contract. A contract may be terminated or damage fees may be put in place if one party of the contract does not uphold their end of the agreement.
Renew or Terminate: Every contract has a time where it is up for review. It is at this moment that both parties will decide if they wish to renew the boundaries of their agreement or decide to terminate the contract. If the contract was deemed initially to be a one-time execution, then the contract is terminated.
It should be understood that some of the steps above can be done as a formality, especially when it comes to such situations as employee hiring, leasing, and more.
Contracts Management Are Vital For Successful Business
Even if implementing contract management hasn’t been something you’ve done in the past, it’s time to start. Concannon offers their services in contract management to ensure that the process is done correctly and scalably. With a large group of well-versed professionals, Concannon Business Consulting is your best defense against poorly executed contracts that could ensnare you in a legal or professional bind.