7 Simple Strategies for Overcoming Poor Contract Management
There are a number of risks that can stem from not properly tracking and managing contracts once they’ve been signed, including things like:
Missing crucial milestones
Breach of contract
Fortunately, there are several straightforward strategies for quickly improving your process to help you mitigate legal and financial risks. Below, find some of the top methods for staying on top of your contracts.
1. Centralize Your Contracts
Perhaps one of the most simple but effective things you can do to improve your contract management is to centralize your contracts in a single, secure online location. This will help you avoid having to search for misplaced contracts and will protect your contracts from being hacked.
Keeping your contracts in a digital location also allows team members to access from anywhere, which is critical in today’s era of remote work.
2. Set Milestone Reminders
Creating reminders for contract milestones — such as expiration or auto-renewal dates — will ensure that you have enough time to re-evaluate a contract. By giving yourself enough notice, you’ll have time to terminate the contract before it auto-renews, or you may decide to take this opportunity to renegotiate the agreement. The Aberdeen Group notes that top-performing organizations annually renegotiate 49% of their contracts, while all others only renegotiate 20% of their contracts each year.
To avoid missing contract milestones, consider adding important contract dates to your calendar or setting up phone reminders for them. Contract management software can also track key milestones, thereby eliminating the hassle of having to add these dates to your calendar yourself.
3. Digitize Paper Contracts
Digitizing paper contracts — including older contracts — will vastly improve your ability to preserve your documents. You’ll also be able to find information in your contracts much more easily, as you’ll be able to run a search for key clauses and terms.
4. Keep Up-to-Date Templates
It’s vitally important to keep up-to-date templates of frequently used contracts — such as non-disclosure agreements — in your centralized contract repository, so team members can access them easily. Enabling colleagues outside the legal department to create routine contracts will also save in-house attorneys time and allow them to focus on more complex matters.
“I often see lawyers and paralegals who are overburdened with reviews of routine contracts. Most of these individuals would rather spend their time sitting in a more strategic role focused on complex, challenging work,” said Rebecca Thorkildsen, EY Global Law Contracts Co-Lead, in a recent report. “We've seen people make a wide range of career moves to avoid this kind of work. The bottom line is that if organizations want to keep their best people, they need to find a way to keep them engaged.”
5. Control Who Can Access Contracts
Limiting access to your contracts is an important strategy for protecting sensitive information. Contract management software allows you to control who can access each contract, ensuring confidential information isn’t improperly viewed.
6. Track Contracts During the Signing Process
During the contract signing process, it’s helpful to track who has the contract and whether they’ve signed it. This can be done with a spreadsheet or by using contract management software.
If using software, consider opting for a system with electronic signature capabilities. E-signatures can lead to contracts being signed faster, which is significant when you consider that companies lose an average of $215,000 each day the contract process goes on, according to Cottrill Research. E-signatures are also conducive to remote work, which continues to be a mainstay for today’s workforce.
“With remote work here to stay, digital solutions like e-signatures are key to keeping businesses moving,” noted a recent Forrester report. The report also found that 60% of its surveyed business and technology leaders said that, “e-signatures are a critical requirement in supporting business continuity and agility.”
7. Summarize Your Contract Achievements
Lastly, consider summarizing your key contract achievements in an easily digestible report. Summaries of contract-related accomplishments are a concrete way to show company leadership how you’re helping to get business done and can provide valuable insights into your contracting process.
Summarizing your contract activity can be done manually or through contract management software, which is able to produce reports on a broad range of issues.