What is contract management?
Gain insights into contract management essentials, challenges, solutions, and system benefits through our practical guide.
In today’s fast-paced business environment, having efficient and effective processes in place is essential for optimising resources and streamlining operations. This need becomes even more important when dealing with contracts, given the need for compliance and security. This is where effective contract management comes in.
In this comprehensive guide, we delve into what contract management is, explore its advantages and challenges, and provide a step-by-step guide for implementing a contract management system in your business.
The contract management lifecycle.
Understanding the contract management lifecycle is essential for adopting a more effective approach. Let's explore the six stages, highlighting the key advantages of an effective contract management system at each step.
1. Contract creation. In the initial phase, verbal agreements are formalised into written contracts, capturing essential information such as services, dates, prices and key goals. Contract management streamlines this process by using standardised forms or templates, ensuring accurate and consistent documentation.
2. Contract negotiation and collaboration. This stage involves aligning interests and establishing agreements based on trust. Contract management helps by providing a central platform for collaboration, information sharing, and change tracking, enhancing communication among stakeholders.
3. Contract review and approval. Before finalising contracts, internal approval is often required, which can be delayed by last minute changes. Contract management streamlines this process with automated workflows aligned with company goals and risk checks, ensuring efficiency while minimsing delays.
4. Contract administration and execution. After approval, contracts enter the signing phase. Contract management software and electronic signatures have not only streamlined this process but also improved accuracy, ensuring alignment with agreed-upon terms, leading to smoother transactions and stronger relationships.
5. Ongoing contract management and renewal. Digital storage systems are essential for easy access to documents, monitoring progress, and following up on tasks. A contract management system ensures compliance through regular check-ups, makes finding documents easy, and assists in making quick decisions about extending, changing, or ending contracts.
6. Contract reporting and tracking. Proper contract reporting and tracking requires monitoring key milestones and deadlines. Contract management software centralises contracts, makes managing them easier with automatic reminders, and uses key performance indicators (KPIs) to keep things clear and efficient from start to finish.
What makes contract management so important?
In business, contract management plays two important functions. First, in an operational context, it ensures everyone follows the agreed terms, making dealings more transparent and reliable which builds trust and strengthens relationships with partners and clients. Second, it acts as a strategic approach to identify, assess, and reduce risks, and in doing so, safeguards your organisation's interests.
Signs you need a contract management system for your business.
Here are four signs that show your business could benefit from a contract management system, leading to better workflow and efficiency:
Your team spends a lot of time looking for contracts.
A contract management system resolves this with a centralised database with search functionalities that allow users to quickly locate information using keywords, dates, parties, and version control.
Your contract process is slow and/or complicated.
A contract management system speeds up contract processes and simplifies management through lifecycle structuring and automation.
Compliance issues have arisen.
A contract management system can automate checks and updates to ensure compliance with laws and regulations, reducing legal risks.
A renewal deadline was missed, resulting in the loss of a valuable contract.
A contract management system automatically tracks and reminds stakeholders of deadlines, preventing oversights and ensuring critical dates are met.
Key steps to implementing a contract management system successfully.
Ensuring a contract management system is effective involves careful planning and execution. No matter the business size or industry, there are a few important steps to follow for successful implementation, let’s look at them now:
1. Assess needs and objectives. Prior to commencing the process, it's important to the specific needs and objectives for system implementation, considering factors like contract volume, compliance requirements, and organisational goals.
2. Select a suitable system. Research and evaluate different contract management software options to find one that meets your organisation's requirements in terms of features, scalability, and budget.
3. Plan implementation strategy. Develop a detailed implementation plan outlining timelines, roles and responsibilities, data migration strategies, and training requirements.
4. Customise configuration. Customise the system to align with your organisation’s processes and workflows, including configuring fields, templates, approval workflows, and user permissions.
5. Data migration. Begin by transferring your existing contract data and documents into the new system, placing a strong emphasis on maintaining accuracy and consistency throughout the migration process.
6. Provide training to team members. Train employees on how to use the new contract management system effectively, including navigation, data entry, document management, and reporting functionalities.
7. Test and iterate. Conduct thorough testing of the system to identify any issues or areas for improvement and make necessary adjustments before full deployment.
8. Rollout and adoption. Roll out the contract management system to your organisation, encouraging user adoption through ongoing support, communication, and feedback mechanisms.
9. Monitor and maintain. And finally, continuously monitor the system's performance and user feedback, adjusting as needed to optimise functionality and ensure ongoing alignment with organisational needs.
By following these steps, you can upgrade your contract management system with confidence, improving efficiency, compliance, risk management, and productivity for your business.
The role of Adobe Acrobat in navigating contract management.
Businesses are increasingly opting for digital contracts and forms to legally document agreements between parties. They ensure consistency in contract management and data collection while reducing physical paperwork and manual tasks.
Adobe Acrobat offers a streamlined solution for effortless storage, organisation, and sharing of PDF contracts and forms, providing crucial security and data protection to meet legal requirements and foster trust with customers, employees, and business partners.
In the digital journey, tools like Adobe Acrobat contribute to reshaping how businesses manage contracts in a digital-first world:
Transition to digital.
Start your journey with Adobe Acrobat Pro to develop bespoke contract templates. Digital documents revolutionise efficiency, saving time and money while sidestepping the hassles of postal services, misplaced paperwork, varying time zones and more. Companies can transform paper files into editable and searchable PDFs with Adobe Acrobat, minimising the need for physical documents. This shift allows for simplified digital storage, easy retrieval, and organised management of documents in electronic form.
Remote collaboration.
It's vital during negotiations for all involved to have the capability to access, amend, and discuss the contract. Adobe Acrobat Pro facilitates live and secure collaboration across any device, ensuring all parties work from the latest version. When signing time arrives, e-signatures can be effortlessly obtained online.
Effortless approval and execution.
Streamline your approval process and bypass delays by adopting automated workflows for gathering e-signatures with a single click. Monitor the status of your contracts from any device, ensuring seamless progress.
