Contract management can be a thankless task. Often, the executive team only notices when there is a problem. However, smooth contract management is essential to running a competitive business in any industry.
Here are five signs that your contract management system is headed for trouble.
1. Inconsistent Contract Terminology
Legal documents like contracts require precision. Many words have specific meanings in contract law. If the language your company uses varies, even slightly, from contract to contract when describing the same terms, you could be setting yourself up for a protracted legal battle.
Even an out of place comma can change the meaning of an entire clause. While many contractual terms will need to be customized for different customers and vendors, the language needs to be kept as consistent as possible.
You need to have a standard set of terms in all of your vendor contracts and a standard set of terms in all of your customer agreements. This standard language will provide a consistent framework for your team use in negotiations.
2. Difficulty in Managing Draft Contract Revisions
How many people do you have working on a contract at one time? Does anyone ever question if they have the most current version? If your document control system makes it possible for someone to work on the wrong version of a contract, you are wasting valuable time and creating an opening for huge mistakes to make their way into the final contract.
Contract errors are more than just embarrassing. They can cause a customer to question your competency. Even worse, they can create litigation risks down the road if they go unnoticed.
3. Intense Tensions Between Legal and Sales
Every company has the same battle between legal and sales. Sales want the contract signed yesterday, and legal wants another week to review the details.
If these tensions are too intense, it hurts morale and can paralyze your organization. The need for speed and accuracy need to be balanced.
If you are using a manual process for managing a contract through the approval process, you are making these tensions worse.
You need a way for sales to track the progress of a contract in the approval process, without them having to bother other staff members. This transparency will also help the sales team give customers accurate information.
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4. Contract Information Access Issues
Information is your most valuable asset. Does everyone in the organization have access to the information they need, when they need it when working on a contract? Do contract managers have easy access to other members of the company responsible for contract implementation?
Is sensitive information adequately protected from unauthorized access?
Manual document control and security systems are not robust enough to allow for on-demand access when needed, while still making sure only authorized personnel to have access to sensitive information.
You need a system when authorized personnel can access the information they need immediately from anywhere in the world.
5. Contract Compliance Penalties
Every contract compliance penalty paid by the company represents a failure of the contract process. Either someone was too optimistic in their promises, someone neglected their duty to perform, or the contract manager failed to follow up.
As contracts become more complex, contract compliance becomes more difficult. You need to automate as much of the compliance management process as possible.
How to Solve These Common Contract Management Pain Points
Contract management has become too complex and too important to rely on a database or spreadsheet and a filing cabinet to run everything.
Contract managers need a skilled digital assistant that can automate much of the process. The right contract management software will solve all of these common contract management issues.
By using alerts, artificial intelligence, and secure cloud-based storage, contract management software allows contract managers to spend their time solving problems instead of searching for documents.
Modern contract management requires smart automation and secure data technology that only contract management software can provide.