What does contract management cover?

Contract management, also known as contract administration, covers a very broad field. It controls the new contracts and the previous ones, they are administered and evaluated.

Nowadays, more attention is given to the administration of contracts since most of the errors are caused in this part. All parts of the contract must be respected and complied with, otherwise a good contract loses all its value. For example, if a food supplier does not deliver the order to a restaurant, that restaurant will not be able to open that day.

Closing a contractThe first thing to do when closing a contract is to have a good communication with the other party of the contract. That is why, although indirectly, relationship management also plays a crucial role in contract management. Relationship management can deal either with the companies from which they buy or with customers ( CRM, Customer Relationship Management ).

As soon as you find a good match, you start with the contract negotiations. It is important for good development after contract management that all conditions are well defined and that the expectations of both parties are realistic. If any of the parties does not comply with the agreements (in its entirety), a clause to solve it could be included a posterior.

Practical examplesContract management deals with everything related to current contracts, including in which important data such as deadlines and visiting hours. For example, the contract between a maintenance person of an aircraft construction company and the company stipulates that you must control one of your machines once a week. However, if the contract is not managed correctly, this check could be omitted and, as a result, a part may be defective.

Another management responsible for the administration of contracts is the monitoring of compliance with the terms and conditions. It is possible that a client who runs a workshop does not say anything when a painting company occasionally forgets to bring a certain type of paint to your company, until suddenly, between a new director in the company and demand compensation. Therefore, to avoid these types of errors and consequences, it is advisable to properly manage the content of a contract.

Analysis and evaluationThe contracts must be analyzed and evaluated regularly. Although this can be done when the contract expires, the ideal is that contract management is in charge of doing it with the current ones. To help determine if the contracts should be revised, rescinded or extended, we provide them with the following questions:

How much benefit do you get from the contract? (financial)How does the contract improve the business processes, the product or the service?Has a problem arisen as a result of the contract?How optimal is the agreed method?How efficient is the collaboration?Is the contract related to a continuous activity or does its duration depend on a project?Why or why do we not cooperate with this supplier or client?

Automate contract managementContract management is a serious thing for many companies, and, therefore, there are many people involved. It is common to use specialised software to maintain a general vision. A logical solution for this is a Document Management System (DMS) specialised in the management of contracts, since, contracts are, of course, documents. This type of DMS software regulates teamwork in contracts and generally includes a specific system for Contract Lifecycle Management (CLM ). The CLM is a functionality that thoroughly traces all the details of the contract.

Contract management is also often mentioned in the context of enterprise resource planning (ERP, Enterprise Resource Planning ) because contracts are usually based on the core processes of a company. The contracts are normally linked to the management of the project, a task that is usually linked to the ERP. Therefore, it should be considered if it is worth integrating software for content management in the ERP system.

Another interesting software for companies in Contract Risk Management (whose translation to Spanish would be Contractual Risk Management ). This type of software is particularly useful for those very large companies with contracts signed by several parties. The consequences of breach of contract can be fatal to the company. For example, a provider that does not provide the customer with the agreed service. This customer who has not been treated properly can put a large claim and this will make the company have a big problem by said provider. These types of contracts are very complex and that is why they should be reviewed regularly. This Contract Risk Management (CRMS) software helps estimate risks that arise with each contract revision and mitigate them.

Source: https://www.contractexperience.com/

CMx ContractExperience provides simple contract management software system with in-built electronic signature and contract management technology solutions to all size companies,