Are you fully confident in your company’s contract management process?
Since the contract will dictate every aspect of a professional relationship, many tend to invest considerable time and resources in drafting agreements to their liking. Once the contract is finalized, both parties can sign the deal confidently, forming another relationship that will hopefully bode well for everyone involved.
For your organization to forge mutually beneficial relationships with other businesses, it’s crucial to manage obligations related to your business contract effectively. With an effective contract management process, all parties involved will save time and effort and benefit their business strategies and procedures.
However, the contract isn’t always as smooth sailing as it sounds on paper.
Assessing your Contract Management Practices
Employing the best contract management practices can lead to significant value by reducing business risk, saving time, and driving down costs, but you shouldn’t assume that you’re doing everything right. With most organizations maintaining 20,000 to 40,000 contracts, the high volume could lead to mistakes.
Missing a contract renewal date or failing to comply with an obligation can significantly impact your company’s growth. As such, it’s crucial to prevent mistakes and bottlenecks from happening in the first place.
It’s not enough to automate document workflow—you must also remember regularly auditing your contract management process. To ensure that your business has the value negotiated with your partners, you must invest time, money, and effort into evaluating the efficiency of your contract management process.
What to Ask During the Audit
Regular audits of your contract management process are essential to prevent any problems that could cause severely damaging issues. However, auditing each stage of the contract lifecycle is easier said than done—auditing itself can be overwhelming, and if you’re not fully equipped and knowledgeable about the proper steps to take, you could end up wasting time and effort!
If you want to remain compliant across all contracts, identify revenue leaks, and maintain strong, consistent customer relationships, you have to audit correctly. To guide you through your audit, consider asking yourself the questions below:
Where Do I Begin?
Auditing the contract management process can be confusing since there are multiple stages involved in the contract lifecycle. To navigate through the audit easier, we recommend considering the eight areas of the contract management lifecycle, namely:
- Storage;
- Generation;
- Negotiation;
- Execution;
- Reporting;
- Compliance;
- Review; and
- Optimization.
What Should I Audit?
For your contract management process to run as smoothly as possible, we have identified the following questions for each stage of the contract management lifecycle that you should address every quarter:
- Storage: Are our contracts accessible?
- Generation: Do we maintain updated contract templates?
- Negotiation: What is the chain of command for this stage?
- Execution: Where are the relevant documents for each contract stored?
- Reporting: Should we update old reports or create new ones to meet new standards?
- Compliance: What compliance issues did we have?
- Review: Which contracts are no longer helpful to the organization?
- Optimization: What can we implement to prevent the problems identified during this audit?
Conclusion
No business has been successful without regular and thorough auditing of their contract management process. What works now may not work in the future, which is why it’s crucial to audit how you manage your contract so that you can come up with the best solutions and methods to reach your goals. With proper auditing and crafting for answers, your organization is sure to achieve immense success!
If you’re looking to improve your contract management process with the best contract management solution, you’ve come to the right place! Our software, Anapact, is an elastic platform that helps every department involved in contracting across the enterprise. Get a demo today!
