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Simplicity: The Future of Contract Management

For quite some time, negotiating and drafting contracts and the ensuing management of those agreements was a complicated (albeit primarily administrative) process. Different people within a company handled different steps in the contracting process, and communication among those members was usually less than ideal. As a result, contract disputes became all too common and companies spent a fortune on enforcing, litigating, and rectifying contract breaches. Fortunately, with the increasing emphasis on streamlining operations and maximizing efficiency, companies are no longer willing to engage in this sort of unnecessary hassle. As a result, there is a growing movement to simplify the entire contract management workflow, from the initial discussions all the way to fulfilling the final step required by the agreement. Given that simplicity is the future of contract management, here is how that can be accomplished:

Strategic Contracting

To ensure smooth and issue-free contract management, it is important to contract with like-minded companies. Rather than choose the cheapest or most convenient vendor or supplier, companies should focus on finding a counterpart that will work out over the long term. This sort of strategic contracting is beneficial for many reasons. For one thing, it will reduce the likelihood that the parties will have issues down the road. This is especially true if the contractual relationship is mutually beneficial and thus the parties are motivated to perform to ensure that they each receive the benefit for which they had bargained. 

In addition, if the contracting relationship is meant to last for a lengthy period of time, it is possible that the parties can continue to add value and create opportunities for each other, as opposed to merely serving as a one-off transaction. In the end, this sort of strategic, long-term view of contracting makes matters much simpler. 

Straightforward Agreements

Once your company has found the right contracting partners, it is key that the formalized agreements are as clear and concise as possible. Contracts that contain pages and pages of overly-detailed terms often get in the way of the deal. Instead, companies should focus on the outcome they hope to attain from the contracting relationship, and then outline the crux of the deal in the simplest terms possible. 

Although it is important to ensure that the language is unambiguous, this does not mean that there must be page after page of clauses pertaining to every subject imaginable, as that ends up creating uncertainty and potential interpretation issues. Positive working relationships and straightforward agreements are critical to keeping things simple and will help everyone focus on what it is they need to do to reap the benefits from the contractual relationship.

Effective Teamwork

There is no way for contract management to be simple if the contract management team does not understand the deals they are overseeing. Far too often, one team handles the contract negotiations, another team addresses the drafting of the contracts, and then a new team takes over to ensure that the contracts are fulfilled. However, without establishing collaborative contract management that ensures the right transition from one team to the next, the contract management team may be left scrambling and trying to figure out what needs to be done. 

These days, with the many effortless and instantaneous communication methods available, there is no justification for ineffective teamwork to cause contract management to flounder. Companies merely need to have a process in place for the transition from one phase to the next to ensure that the entire contracting process runs smoothly. 

Useful Technology 

The rise of technology is probably the biggest factor affecting the simplification of contract management. Cloud-based contract management services (CLM software) have completely transformed the way companies draft, store, and monitor contracts. A solid contract lifecycle management service will offer a practical contract repository that facilitate s storing, organizing, tagging, and searching contracts. 

By making this part of the process faster and easier, the contract management team will have more time to devote to ensuring that the actual terms of the agreement are appropriately executed. 

The Buyer's Guide to Contract Management Software

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