It’s Wednesday evening, and you get a call from a colleague in the sales department. They’re excited because a contract with an international client that’s worth millions is about to close, and they need your help in getting the deal done by the end of the week. You agree to review the contract.
Unfortunately, the contract refers to certain documents you’ve never reviewed. After being unable to track down where these documents are stored, you reach out to colleagues for help. You talk to the Sales Manager, explain that there’s been a delay. The Sales Manager is worried that the client will back out if it takes too long to get sign-off.
Does this scenario sound all too familiar?
Contract Management is a top priority for legal departments
According to the report, Legal Departments on the Move, by Wolters Kluwer and the European Company Lawyers Association, contract management was identified as the part of the current organisation and processes legal departments would improve most urgently. Over half of legal departments (55%) consider contract management to need the most urgent improvements. Collaboration between legal and the business (51%) and compliance management (32%) are other parts of the organisation that legal departments would improve most urgently.
Why you need to have an efficient contract management procedure?
In general, the contract management procedure is disjointed and cumbersome when it is carried out through a series of numerous processes and platforms. As a result, the process lacks transparency since it is unclear who is responsible for which stage of the contract lifecycle. This can lead to bottlenecks and sign-off taking a long time (see the scenario above). When the contract management process is scattered across multiple systems and stakeholders, it’s harder to access analytics to improve the contract lifecycle. How do you know how many active contracts there are? For more information read our whitepaper on how inefficient contract management processes expose the business to risk and discover best practices to improve the contract lifecycle.
Start by examining your existing contract management process
While contract management software can automate the contract lifecycle, it won’t solve all your problems. If you want to improve the contract management process, you need to understand how it works in your organisation. This includes (but is not limited to):
- Where contracts are stored, and who is the owner
- The value of each contract and the renewal date
- Any standardized terms or clauses that are used in contracts
- Stakeholders that are involved in contract sign-off during the approval phase
Map your processes before implementing contract management software
It’s tempting to want to overhaul the entire contract management lifecycle. However, this approach is risky given the enormous amount of change involved – you don’t want to bite off more than you can chew. A safer approach is to pick one stage of the lifecycle at a time and break that stage into smaller steps. You can even visually map out the stage step-by-step, and include the stakeholders involved. Once you know how the contract lifecycle works in your organisation, and where improvements are needed at each stage, you can start reaching out to vendors.
When contract lifecycle management is well-organised, it can ensure clauses are consistent, convenient access and increased compliance.