What is contract management? Your ultimate guide
Ever heard about contract management before? Let’s explain it: What’s one thing that every business all over the world has in common? They use contracts. They may not always come to mind as a core part of your work, but they are everywhere inside of a business. That’s why having a proper contract management platform and process is essential.
What is contract management?
Contract management is the process of managing the agreements that you, either individually or as a business make with other parties. This process spans across the contract lifecycle from pre-sign to post-sign, covering the renewing, renegotiating, executing, complying, archiving, and storing of contracts.
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What are the three contract management phases?
There are three phases when it comes to contract management. There’s a pre-sign, sign, and post-sign phase.
During the pre-sign phase, this is where you write or edit a contract and prepare it for signing. If it’s a digital contract, you can use a template and put all of the required information inside of the contract.
The pre-sign stage isn’t just about a single contract, though–if your company is using a contract management software, the pre-sign phase is also when you can set the groundwork to set your team up for success–this can include setting up workspaces for your different teams, with the relevant templates and tools for each team
After that comes the phase everyone is familiar with, the signing. These days, it’s typically done via e-signing with an e-signature solution. Especially thanks to the pandemic, the acceptance and widespread use of e-signing has surged around the globe.
As you may know though, signing may not be straightforward, and some negotiating may need to be involved. Luckily there are some contract management companies like Oneflow that let you comment with your counterparty in the contract, and edit it after it’s been sent, so that you can cut down the back and forth.
The management and archival phase. Once the contract is signed, it’s then stored inside your contract platforms’ archive. There it can be pulled up at any time to look at the agreement, send it for revisions, updates or renewals, or even termination. The post-sign phase of the contract management process is one that requires oversight and administration. Especially if an organization is working with a large volume of contracts.
Some contract management companies like Oneflow have tools to make this archiving process easier, with tools like folders, tags, global search, and automatic internal reminders for when contracts need to be resigned.
Why is contract management important?
Managing your contracts is important for a number of reasons. It helps you reduce costs and risks, increase efficiency and make informed decisions.
Contracts often involve confidential information, financial commitments, or generally sensitive information. Proper contract management allows organizations to keep track of their contracts, have user permissions to make sure contracts never end up in the wrong hands, and internal reminders to never miss contract deadlines.
Efficient contract management can lead to significant cost savings. By actively monitoring contract performance and milestones, organizations can identify opportunities for cost reduction, such as renegotiating pricing, consolidating contracts, or identifying underutilized services. Additionally, effective contract management helps prevent unnecessary penalties, fees, and legal expenses. By having faster processes for creating and managing contracts, you also save your employees admin time so they can go back to doing what they do best.
Contracts often involve relationships with external parties, such as vendors, suppliers, or clients. Effective contract management helps nurture these relationships by promoting clear communication, trust, and transparency. It fosters a collaborative environment, reducing conflicts, and establishing a foundation for long-term partnerships.
Enhanced efficiency and productivity
Manual contract management processes, such as searching for contracts, tracking deadlines, or managing renewals, can be time-consuming and prone to errors. Implementing contract management systems and workflows streamlines these processes, automates tasks, and centralizes contract-related information. It improves efficiency, reduces administrative burdens, and allows teams to focus on higher-value activities.
Data insights and decision-making
Contract management systems can provide valuable insights through analytics and reporting functionalities. By analyzing contract data, organizations can identify trends, risks, and opportunities. This information enables informed decision-making, such as identifying contract performance issues, optimizing supplier relationships, or identifying areas for process improvement.
Consequences of poor contract management
Poor management of your contracts can have significant consequences for organizations, including legal and compliance risks such as:
- Financial losses through overpayment or missed revenue opportunities
- Operational inefficiencies resulting in missed deadlines and decreased productivity
- Damaged relationships with stakeholders due to miscommunication or unmet expectations
- Missed opportunities for cost savings and business growth
- Disputes and non-compliance
- Uncertainty in both operations and legal matters
What does effective contract management look like?
You’ve got a system in place. Your contracts are all in one place and more coordinated than ever before. But what does effective contract management actually look like?
In short, it means that absolutely everyone in your company can easily find and access your contracts. Be it to renew one, or to check some details, they no longer have to bother anyone or spend hours searching through a database. It can be found in just a few clicks, thanks to powerful search functions that allow you to find any given contract in just a few seconds. With only the one contract acting as a single source of truth. Beyond that, you’ve also got a system in place that minimizes the risk of data breaches, or of some sort of accidental legal non-compliance.
When contract management is truly effective, it allows anyone at any organization to become a contract wiz.
Tips & best practices of contract management
Here are a few tips for finding a contract management solution that works for your company:
A solution that works for everyone
Find a solution that fits not only you and your team, but your entire organization so that all of your contracts are in one place. This is especially important for auditing purposes.
Choose a contract management software that has organizational tools
Contract organization is a necessary step in risk mitigation and for reducing unnecessary admin time. Some software, like Oneflow, allows for different workspaces to keep team’s templates, dashboards, and archives separate.
Choose a software that helps you stay on top of important contract lifecycle events
To make sure you never miss a contract deadline, pick a platform where you can set up internal reminders, and for users to be able to look ahead at upcoming contracts in a calendar view.
User permissions so contracts don’t get in the wrong hands
With sensitive information in contracts, pick a software that has customizable user permissions that not only allow you to control who can access what contract, but also what they can do with different contracts. In Oneflow, permissions settings can get specific enough that one user can view certain team’s documents, edit another team’s templates, while being restricted from any access to another team’s templates.
Pick a contract management platform that can integrate with your other software
By integrating with your other software, you can cut down additional admin time, and strengthen the data integrity of your existing tools. Oneflow integrates with dozens of CRM, ATS, recruitment, and Power Apps, so that data can be auto-populated to and from your existing software.
So why not automate your contract management processes today?
If you’re curious to see what contract management software could do for you, and how it could benefit your business, then why not book a demo today? You can find out more about Oneflow, how it all works, and ask any and all questions you might have.
Why should I use a contract management platform?
A contract management platform is a place where you can control and manage all of your contracts in one place. It’s a hub for all your contract-related activities, such as creating, sending, editing, storing, and managing them. It’s a one-stop shop for all of your contracts that can be accessed by those who are working with contracts inside your organization.
Think of a CRM (Customer Relationship Management) platform, but for your contracts. In fact, a solid contract platform can seamlessly integrate into your CRM. So that you can handle your contracts inside of your CRM, therefore making the management of your contracts even easier and more streamlined.
An example of a contract management platform is Oneflow. It’s a solution that lets you create, edit, send, negotiate, sign and store your contracts all in one place.
What industries uses contract management platforms?
Any department in any business, large and small can use contract management. But especially teams and departments that process a large volume of contracts, like Sales, HR, Finance, Legal and Procurement, benefit from it.
- Sales teams use contract management platforms to speed up their sales processes. By automating their contract workflows and sales proposals, sales teams can spend their time on selling instead of contract admin.
- With a contract management platform, HR teams can turn candidates into hires quicker. They can send out automated employment contracts and have full control over all employee-related contracts.
- Procurement teams get control over and speeds up their long contract processes by using a contract management platform. It lets them shorten the time to sign and stay on top of contract lifecycles.
- Contract management platforms make life easier for legal teams. It ensures them that only the latest version of a template is available and that the contracts are easily accessible.
What questions should you ask before buying a contract management software?
Before buying a contract management platform, you should challenge the vendor on how they handle security. Ask them these questions:
- What is their approach to GDPR?
- What is the use of third parties?
- How do they manage access control?
- How do they work with business continuity and incident management?