A Contract Management Solution is when a third party takes on the responsibility of managing contracts between two parties. This can be between individuals, employee-employer, businesses, organizations, or even countries. This can cover local area businesses to partnerships across the globe. It is the process of managing expectations, drafting documents that are mutually beneficial, signing the contract, and executing. It needs legal know-how in order to accurately get the work done.
With the increasing demand for quality products at reduced operational costs, and busy schedules, the role of a contract manager is very important. A business head cannot spend time drafting a legal document while he has deadlines to meet and a business to grow. When two parties wish to get into business, a contract specifies activities, roles, finance, procurement, the volume of business, and managing of said business. Time zones, language, religion, customs, and beliefs must be taken into account when a contract is drafted.
The following states go into contract management.
1)Preparation– This stage is where the two parties identify their roles, needs, expectations settings are done, documentations to be maintained are defined, and benefits and financial returns considered. Utmost transparency is required and this happens only through honest interaction. In this stage, every risk scenario must be studied and mitigation steps put into effect. Type of contract required, if a standard template s used, problems if any, need to be checked. Any contract should be legally binding and legal counsels are needed in order to ensure required all information needed and gathered is clear.
2) Contract drafting– Clauses and terms, wordings, phrases, and loopholes should be thoroughly studied and discussed in order to not leave any document open for interpretation. Each state in a country has different laws, so that needs to be considered. Especially for contracts spanning different countries or continents, the language barrier is inevitable. Every minute detail that goes into making the framework benefits all parties and leaves nothing open for interpretation. Lastly, all contracts should be mutually beneficial.
3) Consensus– Every stakeholder in the given contract must give their go-ahead. With many stakeholders, the effort needed to arrive at a consensus is higher.
4) Negotiation-The best researched, planned and written contract goes into the final draft. But pushbacks, queries, and further negotiations always follow. Every line, phrase, and word should be discussed transparently. This can be confusing to keep up, and can sometimes lead to a costly mistake. A singular source of communication will mitigate the confusion and ease negotiations.
5) Signing– All the planning, writing and redlining, and rewriting documents are done. Contract signing is the easiest. Remember, if you are signing these contracts across the country or globe and physical meetings are difficult, a legally binding e-signature will solve the problem.
6) Amendments – This is where all the written words, phrases, and clauses kick in and real-time work starts. It is only when operations commence that changes and amendments needed are visible. Change is constant and a contract doesn’t stay stagnant. Therefore, it is pertinent that there is consensus by all parties of the revisions and amendments that need to be made in the contract.
7) Post signature management– All contracts have a deadline. A missed renewal translates to a loss in revenue and further business opportunities. Be aware of the deadline and renew them before the deadline approaches. It shows professionalism, reliability, and respect for the contract. This further strengthens the relationship.
Contract management is a critical part of any business between two or three parties. And to eliminate human errors and make the process more seamless implementing Contract Management Solutions is beneficial.