A contract undergoes various stages in its lifecycle. It is common to use contract management for the entire process or use administration to explain the same thing. However, there is a difference between contract administration and management. We will look at the two terms and their role in the contract lifecycle.
1. Contract Administration
Before parties can sign a contract, the document undergoes various stages before getting the best-written agreement. The steps that precede the signing phase is what is called contract administration. It begins by having an objective and finding the eligible entities to engage with. Businesses can send contract requests to potential partners in business engagements.
The party giving the offer has the mandate to draft a contract for the other party to review. Through negotiations, the document will undergo various amendments before approval by relevant parties. When giving an offer, it is beneficial to talk with the decision-makers. It will give your business an upper hand in getting the terms they agree on at the initial stages.
The contract development stage can take time, and it is essential to invest in the contract management system at https://www.contractsafe.com/. It will speed up the process, ensuring it takes minimal time to get the other partner to sign. Besides saving time, printing the various drafts to share with the other party will cut the costs.
With the online platform, both parties can access the information in a centralized place. Any edits to the documents can happen in real-time. It eliminates the hassle of preparing the hardcopies and meet physically to discuss the deal. Virtual meetings will ensure the parties reach an agreement faster while offering correspondence from the comfort of their offices. The platforms support file sharing to support the negotiation process.
Businesses need to be strategic with how they administrate the initial stages of a contract. It will determine if they get the deal or not. Below are some tips to help businesses with the contract administration process;
- Be clear about your expectations; it is vital to be clear about the type of contract and the expectations for both parties.
- Have a timeline; since the phases can take time to accomplish, having a timeline with help monitor the accomplishments to ensure success in contract administration.
- Outline the financial obligation; money can be a source of disputes in a business agreement. Ensure the contract includes the terms, mode, and timelines for payment obligations. Consider the direct and indirect costs to caution from unexpected expenses.
- Accountability and compliance; the terms in a contract should comply with the standards to avoid future risks. Outline the personnel undertaking each stage to ensure the workers are accountable for the obligations in the agreement.
- Risk management; risk identification, and mitigation strategies minimize the chances of contract failure. A business can protect itself by managing the potential risks in a business agreement.
2. Contract management
After signing a contract, the provisions in the agreement are in effect, and it is where the contract management practices take place. The objective is to ensure a business complies with its obligations and takes up the document's duties. In addition, it helps to know how the contracts are performing.
Although the critical aspects of contract management happen after the signing, the practice also helps with the initial stages. The data from the contract management systems help with the planning stage by knowing what to expect and how to approach the initial contract formulation steps.
It is vital to monitor the timelines during the contract's implementation to ensure the business upholds its obligations. The contract management application helps track all the deadlines and gives alerts as time approaches. It ensures the company can plan for its obligations or inform the other party if there will be any challenges beating the deadlines. The move helps promote a healthy relationship with the stakeholders.
Contract management involves the monitoring and auditing of the deals to know their performance. It helps know the beneficial ones that the business can renew or those they need to terminate once they reach their end. Also, the management can negotiate for better deals when they identify an opportunity with the contracts. There will be a window for the negotiations before the following lifecycle, and it is essential to take advantage of it.
Below are some best practices to help with contract management;
- Centralize the operations; keeping the records in a central place helps with the workflow and accessibility.
- Use the key performance indicators in contract management; ensures the contract’s lifecycle is efficient, and determine any challenges early.
- Automation; the digital platforms allow the business to automate various processes in contract management.
- Compliance; set the regulations and policies that the employees must follow to ensure compliance with the standards.
- Security; use the contract management system to enhance data security. Each personnel accessing the platform should have their level of access.
