Creating contract and managing their lifecycles is one of the biggest challenges of the modern business world. With numerous vendors and stakeholders involved, it is often difficult for businesses to ascertain the full impact of a contract until it is put in place. However, with the process of contract lifecycle management, organizations can effectively leverage their legal agreements and assess them for performance, compliance, and other success factors as defined by the contract. With that in mind, here’s how a company can effectively manage the lifecycle of a contract to the benefit of both themselves and the entity that they entered into a contract with.
The Initial Phases of the Contract Lifecyle
Before formally entering a contract, a business must actually request one. This contract can codify an existing business relationship or be the start of a new one, although it is always preferable that a business create a contract when enacting a new business relationship. Once a contract is requested, a draft of the contract needs to be written. However, most contracts are not just agreed upon and signed in their initial form. Often, substantial changes to be made for both sides to agree to the terms of the contract.
This phase is called the negotiation process of the contract, and it involves setting up the final terms of the contract. This includes any KPIs that both parties want to judge the success of the contract by. Your business is deemed competent only when the operating procedures are up to the mark. Many components are in place because you know how they are meant to be done. This is a key area where contract management software can come into play, as it can streamline the process and allows authorized users to track any changes that have been made to the contract during this process.
Storing and Tracking the Contract
After the contract is negotiated and signed, it then needs to be stored and organized so that its success can be measured. For this reason, many organizations have opted to forego physical storage and digitally store their contract instead. This has a number of advantages, including being able to tag the contract with notes pointing to relevant information so that they do not get lost by the wayside.
Once the contract is organized and set up in a digital store space, it can then be tracked and reported upon to measure its success. A successful contract lifecycle management process continually monitors the important paraments and KPIS of a contract and makes sure that both organizations are benefiting from the terms of the contract that have been set.
The contract lifecycle management process is an essential one that makes sure that contracts are being assessed properly and used to the benefit of both parties. If a contract is underperforming or becomes obsolete due to new technologies or business practices, contract lifecycle management also gives both parties the chance to renegotiate the contract to terms that make more sense in the growing business landscape. Although it may seem easy, lifecycles management with its several moving parts, in actuality, is quite challenging and time-consuming. The smallest changes can impact the margins to a great extent. The key is to realize what sort of problems may arise down the road and fabricate solutions to them beforehand. This can help a business make more well-informed decisions and create a more equitable contract process that fulfills the initial intention of the contract itself.