Your contract management process affects everything from your supply chain to your customer service. The more efficient every part of the contract management process is, the more profitable your business will be.
Here are three ways you can further optimize your systems.
1. Create Written, Formal Handover Practices
When something falls through the cracks in your contract management process, it can be disastrous. The only way to prevent this from happening is to make sure there are no cracks.
You need to create a formal handover process that is written down. The best handover practices involve a formal handover meeting where everyone who had a part in drafting and negotiating the contract is in the room with everyone who will have a role in executing the agreement.
When the contract management team has a written handover plan to follow, it eliminates all the guesswork. The team will always know who is responsible for the execution of each part of the contract.
By making standard operating procedures for the contract handover process, you ensure that there will never be any surprise contract compliance issues.
2. Standardize Your Agreements
How consistent is your language across all of your agreements? How consistent are the timelines? The more variation there is in your contracts, the more effort and expense goes into managing them.
You should audit your contracts for consistency in language, terms, and timelines.
Inconsistent language and terms for customers and vendors in the same position increases your litigation risk. You want all of your contracts to have the same language to describe the same basic terms. This is sometimes known as the contract boilerplate.
The boilerplate may sound boring, but this language is critical to protecting your organization in the event of a dispute.
It’s hard enough to stay on top of all the agreements that are expiring or auto-renewing. But, when every contract is for a different length of time, it makes it almost impossible to predict the contract management workflow and to streamline the contract lifecycle.
If all vendor contracts need to be renewed every two years or all new customer contracts are for one year, it is easier to set follow-up dates. You are less likely to miss key deadlines in the contract lifecycle when you know the exact lifecycle length for each contract.
3. Create Cross-Department Teams
Your contract management team are experts in contract language, enforcement, and consequences. But your contract management team likely lacks operational, sales, and customer service expertise.
Creating cross-department teams that meet every month, or even every quarter, will improve your contract management efficiency.
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Having regular contact with the people who are responsible for executing the different stages of the contract during its lifecycle will help avoid compliance issues. It will also help ensure that the sales team isn’t over-promising when meeting with potential clients.
Setting up cross-department teams also improves communications. It prevents critical customer knowledge from being siloed from the rest of the company. This practice also makes it easier to solve problems quickly and in a way that most benefits the customer and the company.
It can feel like having a fully-optimized contract management process is a moving target. There is always something new to deal with. But, if you take these three steps, you will encounter fewer surprises. These three steps will improve your contract management workflow and benefit the rest of the company.