4 Roadblocks to Improving Your Contract Management

As a company becomes successful, it often begins to become set in its ways. Whether those processes are good or bad, the company staff believes that it is key to maintain all of them.

However, the reality is that what got the company here so far, won’t necessarily take the company to the next level. Here are 4 common roadblocks that limit your contract management practice.

1. Not Evaluating Each Client’s Profitability

While it sounds great to have as many clients as possible, it is much better to keep only those profitable ones. Focusing on an aggregate bottom line may be keeping your organization from achieving its maximum profitability.

By creating profit and loss statements for each of your clients, you can establish a benchmark and use it identify the ones that are performing below that benchmark. Servicing clients requires a lot of time, which you only have a limited amount of. If you want to develop deep customer intimacy and maintain a sustainable operation, you have to focus on a select few clients that meet your profitability guidelines.

2. Not Trusting Your Direct Supports

When one of your main objectives is to develop great customer relationships, you often require your direct supports to go the extra mile in every aspect of your contract lifecycle. However, why is it that when it to comes to making an important decision, you disregard the advice from your direct supports.

By not trusting the suggestions from your direct supports, the ones that communicate on a daily basis with your clients, you’re undermining the client relationship for two reasons.

First, you’re showing that your account manager or account executive is just a messenger. The client will start skipping that person and go to the “real decision maker”. Second, you’re assigning back to yourself work that you assigned to your direct support to complete in the first place. Does this sound like a good idea?

3. Not Escalating Your Contract Management System

American culture celebrates entrepreneurship. Nowadays we have a high level of admiration for startup founders that was previously reserved only for NASA spacemen. This admiration creates such a high level of confidence in business people that they think that they can always runs things as they used to do back at their garages.

But procrastinating on an contract management software is a ticking time bomb. When your company reaches 50 to 100 employees, there is no way that it can continue to use the same paper-based processes that were used back when it had just 10 employees.

A contract management system allows you to save time and money by automating several contract management processes and ensuring compliance of pre-approved contract language.

4. Not Promoting Continuous Training

If you don’t swim, you sink or are taken away by the current. This is particularly in contract management. Your team of contract managers need to keep abreast in the best practices to remain competitive.

There are several accreditations and certifications available for the contract management industry. For example, there is the IACCM Supplier Relationship Management (SRM) Certification Program, which provides useful guidelines to accelerate the contract management process with your enterprise’s supply base.

Our industry is constantly evolving and your company needs to stay on top of upcoming trends. For example, there is an increase in the demand for enterprises that have detailed processes for detailed oversight of commercial terms, cost containment, required renegotiation, and margin protection.


Four common roadblocks to improving your contract management processes are not evaluating each client’s profitability, not trusting your direct supports, not escalating your contract management system, and not promoting continuous staff training.