Once the parties to a contract reach mutually agreeable terms and the contract is executed, you can rest easy…right? Absolutely not! After the point of contract execution is where so many organizations drop the ball and unknowingly allow revenue to fly out of the window and/or encounter non-compliance issues. Effective management of contracts provides several benefits to an organization. The benefits include, but are not limited to, the elimination of inefficient company operations, identification and prevention of missed revenue opportunities and enhanced contractual compliance.

Step 1 :
The effective management of contracts begins with clear and efficient policies and procedures. The methodology that an organization utilizes to process its contracts should be custom created and consistent with the organization’s vision, goals, uniqueness and its relentless pursuit of a sustainable competitive advantage. Consider the following:

• Is there a formal process for routing a contract within your company? If so, has this process been communicated to all with a need-to-know? Is it possible that contracts for your company are being signed by individuals without the proper capacity to execute and/or those unfamiliar with the company’s policies and procedures?

• Does your company have an executed contract for all customers/vendors? Is there a documented procedure if your customer/vendor desires to utilize their contract instead of your company’s contract OR if your customer/vendor requests modifications to your contract?

Step 2 :
One often overlooked, but critical step in the effective management of contracts is the ability to retrieve any customer/vendor contract immediately, or to make your contracts, visible. If you cannot locate your contracts in a timely manner or worse yet, not at all, your organization could fail to capture volume discounts, rebates and early payment incentives. In addition, contractual commitments/obligations may go unfulfilled or viable cross-selling opportunities may go unnoticed because the terms and conditions of the contract and the ensuing business relationship between the parties are not properly monitored. All of the aforementioned have the potential to cost your organization millions of dollars every year.

Ideally, a company’s contracts should reside in a central repository and be converted into electronic format to ensure visibility as well as accessibility. The electronic format should also be “searchable” by any description/characteristic/keyword that is contained within the document or prescribed by your company, such as customer name, product number, product category, etc.

Step 3 :
Depending on the size of your organization, its needs and the complexities of its contracts, the next step in the effective management of contracts is to acquire an internet based contract management system. An exemplary contract management system should afford its users automated and auditable contract processes, contract monitoring and analysis capabilities, secure, electronic contract storage and the ability to “talk” to other company-wide business systems.

Step 4 :
The last step in the effective management of contracts is to accurately populate your organization’s contract management system. To achieve this goal, the user must be detailed oriented, patient and computer savvy or else you run the risk of erroneous information overtaking your otherwise perfectly sound contract management system. Thus, your organization would commit the first rule of any computerized system, garbage in-garbage out.

In a perfect world, your current staff would possess the expertise, time and effort required to create, implement and sustain your organization’s contract management system. Unfortunately, today’s business environment prohibits such an undertaking, yet the task is imperative to achieve a sustainable competitive advantage.

Upscale Contract Management is poised to assist you in every step of the contract management process. Unlock your organization’s potential — contact Upscale Contract Management to secure your optimal, yet “fiscally-friendly”, contract management solutions.