5 Challenges in Contract Management

The field of contract management is filled with obstacles that prevent your organization from achieving operational efficiency. While some of those obstacles may be minor, others are eating away your profits and decreasing the chances for sustainable operation.

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Here are 5 major challenges in contract management to watch out for.

1. Maintaining Contracts That Aren’t in Writing

As contract managers, nothing can be more frustrating than something you can’t control. While verbal contracts are supposed to hold up just fine in court, the reality is that verbal contracts are open to interpretation from each party. Still, there are certain “agreements among” that may be older than the enterprise at which you work.

Things are even more complicated when those verbal agreements depend entirely on the relationship between two people. If the relationship were to go sour, what would happen to the agreement? It goes without saying, every contract needs to be stored within your contract management system so there are no doubts about the terms and conditions.

2. Defining and Tracking Contract Costs

Keeping track of contract costs is major issue, especially in government contracts. For example, the Pentagon held back $5.2 million in payments to Boeing after a crackdown on regulation that took effect in 2011 and required contractors to meet standards from internal reporting systems.

Several government contractors have been slow to adopt digital contract management systems even though they provide excellent visibility and tracking of costs. Manual systems for record keeping and cost accounting are ineffective because they never allow the client or contractor to have a real snapshot of a project’s budget.


3. Dealing with Boilerplate Language

One of the benefits of boilerplate language is that it speeds up execution of contracts. However, boilerplate language should be reviewed on a regular basis to make sure that it meets internal and external compliance requirements. A rule of thumb is to review standard contract language every 6 to 12 months.

One important benefit from a robust enterprise contract management system is the ability to handle several contract templates. Unlike paper-based contract management systems that limit to a single template, a digital system allows your team to have many different templates. Even more, the system allows managers to assign permissions so that only to those that need them can access them. This prevents any doubt regarding which template to use.

4.  Unnecessarily Extending Legal Review

Few things can slow down a business transaction as much as legal review. Because of this, people often want to circumvent legal review in the contracting process.

A simple way to prevent clients from becoming frustrated with legal reviews is to highlight only the necessary key legal terms to be reviewed. For example, a 20-page contract may not need to be reviewed in full by a legal counsel when it’s only 5 to 6 key paragraphs that need legal opinion. By assuring business partners that legal review will take the right amount of time, you are ensuring that they welcome it instead of shunning it.

5. Executing Contracts Via Snail Mail

Contract execution can be a major pain point in any contract lifecycle. Printing and mailing a contract for the other party to reviews and send back with revisions is a very inefficient process.

Emailing contracts forthe other party to print, redline, and either mail back or scan and email back is not much more efficient. Your company should leverage e-signature capabilities of contract management systems to execute contracts faster.

The ESIGN Act is almost 20 years old and clearly states that a contract “may not be denied legal effect, validity, or enforceability solely because it is in electronic form.”  E-signatures are a valid way to accelerate the execution of contracts, and to reduce the costs of contract processes.


Five major challenges in contract management are maintaining verbal contracts, figuring out and keeping track of costs, dealing with boilerplate language, unnecessarily extending legal review, and executing contracts via regular mail. Schedule a demo of our contract management software to learn how it can help your organization overcome all of these challenges and more.