Companies often consider the negotiation and approval of contracts as the complicated and time-consuming aspect of contract management. However, a lot of the real work starts once the deal has closed and all relevant documentation has been executed. Just because everyone has come to an agreement and has formalized the terms in writing, the parties involved cannot simply toss those written documents aside and forget about them.
It is the responsibility of the parties to a contract to thoroughly examine the contents of it, as well as any amendments, addenda, or other pertinent information, so that they are fully apprised of their role and responsibilities moving forward.
In fact, as soon as a transaction closes, copies of all relevant documents should be disseminated to every party to the contract. The various recipients (likely two or more separate companies) should then organize and file those documents immediately. In addition, a plan for periodic review of the contracts to assess performance as stipulated by the contractual terms should be outlined.
This is especially important for long-term contracts and/or those that involve continuous or multiple dates for specific deliverables or performance. In order to facilitate this process, companies can utilize contract management software that enables them to securely upload and store executed contracts, organize those contracts into folders and subfolders, and create alerts with respect to key dates and important milestones. This simple step can help businesses keep track of contractual obligations and determine whether they are being met in a timely fashion.
One of the primary benefits of utilizing an online contract management service is the fact that all contractual data will be in one central location, rather than scattered about multiple hard drives, spreadsheets, or filing cabinets. By taking advantage of contract management technology, companies can ensure optimal organization and consistent contract performance. Plus, housing contracts in an online repository simplifies the searching and/or reviewing of contractual documents, including any of their addenda or amendments, further augmenting the ability to supervise contract performance.
Companies that do not organize their contract portfolio and regularly monitor contract performance may miss important deadlines, which can have significant financial consequences. For example, failing to comply may lead to a company incurring penalties or damages and can even result in contract rescission. In addition, there may be deadlines or timeframes for the exercising of an option, special renewal conditions, or expiration provisions, and by not paying attention to key dates, the possibility of missing out on these opportunities may prove costly.
The implementation of a simple yet effective contract management system will assist with contract performance, and it will also help a company with the apportionment of its finances and resources.