The Top 5 Best Practices for Contract Compliance
Every aspect of the contracting process requires patience and a strong attention to detail. The negotiation phase can be incredibly arduous, and drafting often goes round and round as lawyers seek to agree upon the contractual language. Of course, once the deal is done and the ink on the documents has dried, the intricacies of administering the contract and ensuring proper performance and compliance begin. Here are some of the best practices for contract compliance:
Stay Meticulously Organized
The only way to ensure that a firm is fulfilling its contractual obligations is by implementing a comprehensive contract management system. Most contracts have very specific deadlines and schedules, and timeliness is always an important facet of compliance. As a result, it is critical to ensure that contracts are safely stored in a centralized repository and organized in a coherent fashion. This must begin as early as possible because once the portfolio starts to grow, it will become increasingly difficulty to take care of organizational matters retroactively, which can create a massive headache compliance-wise.
Establish Goals and Metrics
In many cases, when contracts are haphazardly managed, there is a good chance that they will not be renewed. This is clearly an irresponsible approach to building a business if contracting plays a big role in a company’s operations. Unfortunately, people often view contracts as documents that are merely a formality, but the way in which they are managed can have a tremendous impact on a company’s bottom line. For this reason, it is important to establish the goals of each contract as well as the contract portfolio as a whole. By thinking about the real purpose and value of contracts and instituting metrics to ascertain whether the goals and objectives are being met, it will be both necessary and desirable to strive for compliance.
Clarify Roles and Responsibilities
To avoid costly redundancies or an unfortunate oversight, the personnel involved in overseeing contracts must have clear roles and responsibilities. In far too many instances, compliance issues arise when there are unclear expectations, disorganized work allocation, and/or lapses in communication. Thus, the contract management process must be carefully outlined and each professional’s role within the structure must be clearly elucidated.
Standardize the Process
Standardizing a contract management process that encompasses a ton of disparate contracts may seem difficult to achieve, but it is completely doable with a small investment in the right technology. These days, there is robust yet affordable contract management software available that can help. By utilizing the right solution, technology can take care of some of the more tedious aspects of contract management, which inevitably facilitates compliance.
Keep up with Changes
In a number of industries, contract compliance comes down to following a whole bunch of rules and regulations. These may be local, state, or federal laws and/or come from the rules and decisions of local, state, or federal agencies. In all cases, it is the responsibility of the companies operating within the relevant industry to remain abreast of these legal requirements. Therefore, one of the key components of any contract compliance strategy must include the devotion of resources to retaining counsel or some other expert who can keep the firm apprised of any pertinent changes.