Successful contract administration requires some serious planning and meticulous oversight. Regardless of whether a company’s portfolio has 50 contracts or 500, there will be a lot of details and deadlines to monitor. As a result, it is crucial for a company to have a solid contract management team in place, and one that is capable of overseeing any and all contracts that are added to the portfolio. Here are the top 5 best practices for contract administration:
Create a Cohesive Team
Putting together a good team is one of the most important steps to take for every single company department. If the members of the contract management team are not on the same page, it will be far too easy for important contract deadlines to be forgotten or logistical issues to arise. Thus, with contract management, it is particularly important for the team members to have strong communication skills, a keen attention to detail, and the ability to take action quickly and decisively. By creating a cohesive team with these skills, it shouldn’t be too hard for them to keep all of the details related to contracting in order.
Formulate a Clear Strategy
Once the right team has been created, those folks will need to formulate a clear strategy regarding the manner in which they intend to manage the portfolio. Roles must be assigned according to each member’s strengths and weaknesses. In addition, the portfolio may need to be divvied up on the basis of timeframes or contract type. As with any business operation, the only way that contract administration will succeed is by establishing concrete objectives and instituting a clear strategy from the outset.
Invest in the Right Technology
Investing in the right technology will be critical to staying organized and ensuring that there is appropriate contract performance and compliance. Even if a portfolio is relatively small in the beginning, it will become impossible to keep up as more contracts are added. As a result, it is wise to invest in a dynamic solution that will accommodate contracting growth. Some key features to consider are data security, unlimited storage and users, and round the clock technical support.
Continuously Assess Operations and Outcomes
There is a common misconception that contract administration merely entails making payments and monitoring deliverables, both tangible and otherwise. But, the reality is that contracts often play a huge role in a company’s operations. Whether contracting with a vendor that will be providing goods for the company to create a product or contracting with other firms to receive professional services, all contracts involve an exchange of promises that add value to the business in some way. As a result, contract performance must be assessed within the larger context of the business’s operations. This will allow the company to evaluate whether its contracts are helping to facilitate, or perhaps even hinder, the business’s overarching goals.
Think Long Term
Another issue with contract administration is that companies often just look at each individual contract based on its duration. Granted, some agreements will expire in six months to a year, but many will last much longer that. But, with the right mindset, some contracts can become real assets over time. Establishing relationships with contracting partners over the long haul will result in cost savings, and may even lead to other business opportunities. As with most business operations, contract management requires a long-term approach.