Many businesses have so many differences in their systems and operations, mostly because of the gaps in each industry. However, one thing that almost all companies have in common is that they all utilize contracts. Whether it’s for procuring the terms with an employee, a deal with another business, and more, contracts have been used to set terms.
So much of a business’s profits actually come from the fulfillment and compliance of other people in respect of those arrangements. It rightly follows that having proper contract compliance and management is the secret to tapping the full potential revenue of your business.
How exactly do you go about tracking your business’s contract compliance with your employee and business relationships? Here’s a step-by-step guide on how to do so:
1) Use Contract Management Software
As you start to invest better efforts into checking out the contract compliance of the company, it’s ideal to have the right tools. Contract management software like Anapact makes it easy to arrange and access all the contracts that a company has, allowing more than 25,000 contracts.
Going digital can be a great solution instead of sorting through page after page of the contracts too, which is much more time-consuming and stressful. You could also use the software for proper procurement billing, accounting, and audits to tend to the financial side of contracts.
2) Utilize Standardized Templates
Monitoring contract compliance can be a little complicated when there are too many different templates used. The differences in format and the language can be tougher to decipher, and it takes up more time from several departments in your business to make and interpret.
For simplicity’s sake, start creating and utilizing standardized templates instead. You’d be able to cut down on the hours spent on contract creation, and it will be easier to go through the clauses made and signed in a contract.
3) Instill and Move Through Your Workflow
Before drafting a contract or finally agreeing to it, it’s ideal to run it through the involved departments and management. Instilling a workflow in order to gain approval for a contract is necessary for everyone to understand the specific terms they have to comply with.
Contract management software can be great in this regard as well since businesses will automate their workflow. Your department can move through this step and approve a contract without any hassles. Be sure to tend to any backlogs if there are any.
4) Observe Company Performance
Contract compliance means finally enforcing all the terms that have been written. Watching the parties involved in a contract and ensuring that their performance complies with all the conditions in their agreement can be quite a long and unending process.
One of the things that can help observe the company’s capabilities of complying with the contracts is key performance indicators. These KPIs should be based on the relevant clauses written in your document to help people remember what’s asked of them a little easier.
5) Check on Affiliates
Lastly, businesses should be able to check in with any companies they share a contractual relationship with. Although it’s discouraged to mico manage them, paying attention to whether they’re holding up their end of their deals would be beneficial to your business. Request progress reports when necessary and review them with the contract details in mind.
Having everyone participate in contract compliance needs to be a united effort, and tracking the terms is a great step towards doing so. Once you have a steady process of how to monitor contract compliance, you can certainly improve other aspects of your contract management.
Looking for an automated contract management system? Anapact is an enterprise contract lifecycle management solution that’s great for small and mid-sized businesses. Get a demo today!