For many companies, contracts are handled at a departmental level without much oversight vertically or laterally. There are certainly advantages to this divide and conquer method, but fragmentation of the contract management process can prove quite problematic as well. Ideally, companies should implement a high level contract management system that still allows for some segmentation without causing a confusing, disparate approach. Here are tips to improve enterprise-wide contract management:
To simplify any contract management system it is important to rely on templates that include predetermined and even pre-negotiated terms and conditions. For many businesses, there will be similar contracts needed with various vendors or different contracts needed with the same vendor. As a company continues to engage in high volume contracting, it will become clear what provisions it will want and need for different types of agreements. These routinely needed clauses can be used as the starting point for the company's contract templates and then tailored as appropriate. This will eliminate the need to spend a ton of time negotiating and drafting with each contracting cycle.
Automate Whenever Possible
In addition to standardizing contract language, it is helpful to automate other facets of the contracting lifecycle as much as possible. For example, the contract management system should incorporate a specific plan for getting contract approvals and eventually the requisite signatures. One of the easiest ways to automate the process is by utilizing purpose-built contract management software. The right system should facilitate keeping track of important dates and sharing documents with other parties.
Keep a Central Repository
The key to streamlining enterprise-wide contract management is to implement a centralized approach to the process. This means using a contract management system that works for every department and is not just specific to one aspect of the operations. All of the company's contracts should be saved in one secure location and then organized as the primary administrator sees fit. The only way to retain control over the contracting process and its impact on the company is by viewing the system from a portfolio perspective.
Analyze Individual Contracts and the Portfolio as a Whole
It is important to keep in mind that individual contracts can be part of a larger portfolio without getting lost in the fray. A coherent contract management system will include analyses of individual contract performance, as well as the synergistic effect of all of the contracts within the portfolio. The benefit to centralizing contract management is that it allows for broader oversight of the impact that the general contracting cycles have on the overall business.
Implement a Robust Contract Management System
In the end, the best way to improve contract management at the highest levels is by investing in a robust online contract management system. There are plenty of solutions available for companies of any size and with any budget. The solution selected should offer stringent security standards, such as encryption, multi-factor authentication, and permissions-based settings to prevent contract data from becoming compromised. In addition, to increase visibility and therefore control over the portfolio, it is important to have alerting and reporting features included within the system.