Contract management is one of the biggest responsibilities for businesses of all sizes. Efficiently managing your contracts has a direct positive impact on your financial performance, your relationships with third parties, and your organizational reputation.
According to IBM, the average Fortune 1000 company may have as many as 20,000 to 40,000 active contracts at any given point in time. With so many contracts and related documents to keep track of, effective contract management is a must.
In this article, we’ll discuss five of the most important traits and skills for contract managers to have, so that you can achieve effective contract management within your own organization.
1. Time Management
Contract management is inherently a time-consuming process (although technology can certainly help), so contract managers who know how to optimize their use of time will be better positioned for success.
The stages of contract management include:
Research and strategic planning
New contract requests
Reviews, approvals, and signatures
Monitoring, amendments, and revisions
Housekeeping and tidying up
With so many different tasks and moving parts, it’s essential for contract managers to have excellent time management skills. Contract management software can help you manage your time better by automating much of your workflow, freeing up time for managers to spend on higher-level parts of the contract management process.
2. Risk Management
Every contract has risks involved for the parties who engage in it. Missed deadlines, failed obligations, or the exposure of sensitive information can result in a variety of negative consequences, from financial penalties to legal action.
The best contract managers understand both the risks of contract management and the most effective ways to mitigate these risks. Learning how to close loopholes and keep risk at a manageable level is an essential skill for contract managers.
Risk management plans and qualitative and quantitative risk assessments are crucial tools for contract managers. Of course, effectively managing contract risk is a lot easier with the right contract management software, which can help you monitor the lifecycle of a contract so you can address issues as they crop up, and in some cases even identify and mitigate risks before the turn into problems.
3. Understanding the Compliance Landscape
The relationship between contract management and compliance is a very close one; both processes have a great deal of overlap and intertwining. Both contract management and compliance seek to ensure that the organization performs its obligations under a given agreement to the best of its abilities.
Compliance is especially important for organizations who are in industries such as healthcare, finance, and retail. These industries are subject to strict regulations (such as Stark Law, Sarbanes-Oxley, and PCI DSS, respectively) that must also be adhered to, above and beyond the requirements of the contract itself.
4. Attention to Detail
Business contracts are often as much about the tiny details as they are about the big picture. Even seemingly minor issues can have a “domino effect,” spiraling into huge problems that affect the viability of the project as a whole. And then there’s the story of a missing comma that cost a company $5 million!
Contract managers must have a detail-oriented mindset, understanding the ins and outs of the organization in order to execute the contract successfully. Remaining meticulous about deadlines and other concerns is a critical skill for contract managers. For this reason, many contract managers rely on contract management software that can send them reminders and bring greater consistency to the process, but the need to pay close attention to all details of a contract remains.
With potentially tens of thousands of contracts on your plate, effectively keeping track of all of them is a superhuman task. That’s why so many companies, small, medium, and large, make use of dedicated contract management software that can help regain control of the contract management process.
To find the best contract management software for their situation, contract managers need to be tech-savvy and stay on top of the industry’s technology landscape. Some of the contract management software features to look for include:
Security and compliance
User access restrictions
Logs and activity tracking
Customizable monitoring and alerts
Excellent customer support
The role of contract managers, like the role of contract management itself, is becoming more and more important as businesses engage in a growing number of contracts.
Fortunately, contract managers can rely on dedicated contract management software to help them better manage their time and stay on top of the contract lifecycle.