Optimizing processes?! Probably the wish of every manager in the company. If the contract management process is optimized, employees can work more efficiently and achieve more or different things in the same time, so the idea.
Contracts are the basis for the business capacity of companies. Therefore, it is extremely useful to improve the contract management process with the help of central contract management.
This blog article explains exactly how the contract management process works and how it can be improved through digital design.
Defining contract management
Anyone who deals with contracts in a company certainly already has an idea of what a qualified contract management should include. A contract management definition is as follows:
Contract management supports the phases of preparation, negotiation, implementation and overview of contractual relationships to and from the market.
It keeps track of contract changes and enables contract management for financial, scheduling, personnel or technical reasons.
Steps of the contract management process
What exactly does a contract management process involve? A really good contract management system supports all phases of a contract life cycle from the initiation of the contractual relationship through implementation to administration and final archiving.
The contract management process begins with the initiation of a contractual relationship. As soon as two parties enter into discussions about a contractual relationship, all related information such as draft contracts and contact persons for a customer or supplier should be brought together in one file. This creates transparency and every employee has an overview of all relevant information from the beginning of the business relationship.
Issuance & negotiation
If a business relationship develops from the first initiation, contracts must be drawn up in the next process step. Contract management offers the possibility to access central templates, which makes it possible to create contract drafts much faster. In practice, several rounds of negotiations are often required before the final signing, in which the contract contents are negotiated. In a central contract management system, all changes can be tracked at a later date using a version history.
Review & release
After successful negotiation, the contract is submitted to internal review for approval. This can be a multi-stage process involving employees and superiors from different departments. In the contract management process, these check steps can be represented using workflows. The advantage is that these workflows record who has agreed to release the contract or added a comment if necessary.
In the course of the contract management process, the signing of the contract now follows. The released document is sent to the contract partner. Finally, the signed contract is added to the corresponding master agreement. Different departments have the same level of information about the contract status and the current version at all times with the help of central contract management.
After contracts have been concluded and entered into the contract management system, the administration of these contracts is highly relevant for a company. Essential for contract management is deadline management. This ensures that deadlines are no longer missed. By giving early warning, contracts can either be cancelled in time or conditions can be renegotiated. Furthermore, contract management, in which all contracts are centrally stored, helps to keep an ongoing overview of the costs arising from contractual obligations.
The final step of the contract management process includes archiving. In a qualitative contract management system, rules stored in the system ensure that contracts and business-relevant information are either automatically deleted or archived in an unchangeable form, depending on the content, after the expiration of legal deadlines. This means that the employees responsible do not have to set up manual resubmissions. The risk that contracts cannot be found later is also reduced.
Contract management vs. contract administration
The described procedure shows that the process of a contract management goes far beyond that of a pure contract administration and starts already with the initiation of a contractual relationship and ends only with the termination of this relationship or with archiving. By introducing a contract management system, you ensure transparency and complete control over all contracts in your company.
Contract management – digitalized!
As with many processes, the same process applies to contract management: Do it digitally! Digital contract management improves the contract management process and can also trigger further processes and workflows.
You are already using Microsoft 365 and SharePoint Online? Even better! Because with these useful tools you already have the basis for digital contract management in your company. Contact us and learn how you can map your contract management with SharePoint Online and d.velop solutions.