How a Contract Management Plan Can Improve Your Business Processes
60-80% of business transactions are managed by contracts. Poorly managed contracts can be stressful for anyone – misinformation and slow reaction times can cloud what would be an otherwise positive experience. Contract lifecycle management (CLM) is necessary throughout the duration of a contract and is critical to effectively executing your organization’s buy-side and sell-side activities as well as with other aspects of the business such as onboarding personnel.
Luckily, having clarity on a project before you begin the actual contracting process (i.e pre-execution) helps to initiate discussions with staff about responsibilities and goals. For this reason, it’s important to have a solid contract management plan in place up front. Then, with effective electronic contract tracking tools such as contract management software you can streamline steps taken to implement a plan, ensuring compliance and proper post-execution management of the agreement.
What is a Contract Management Plan?
A contract management plan is a tool that helps the in-house counsel, procurement officer, contract manager, or any other official leading the project to define, monitor, assess and fulfill contract requirements. This can apply to both buy-side (accounts payable) and sell-side (accounts receivable) agreements. When a team does not maintain the stipulations of a contract, the result can lead to an inability to provide services or goods that the staff planned to either obtain or offer a client – typically resulting in some form of liability.
Foregoing contracts altogether is just not an option for most businesses. It may be beneficial to think of your management plan as a roadmap for how you are going to complete your goals.
Elements of a Contract Management Plan
No contract is complete without proper methodology. A plan can consist of many elements, but some of them include:
- Prices for goods and services
- Role and duty assignments
- Dates and times for when specific actions should be taken
- The type of relationship to be maintained between two entities
- Contractor performance and client satisfaction
- How to identify resources for particular services
Details such as these are important – clear communication between stakeholders, vendors, and clients can protect high-stakes arrangements and mitigate risk. It’s also important to have the right processes and mechanisms in place to define, monitor, assess and fulfill the contract requirements.
Security and Governance As Determining Factors
Contract planning is especially helpful in industries that focus heavily on governance due to strict industry regulations, such as government, healthcare, energy, pharmaceutical, and biotechnology by providing the following:
Healthcare Professionals Can Streamline Their Processes
A well-planned contract management system will circumvent mistakes with coding, dates, and times and help manage relationships with providers, payers, suppliers and patients. Automatic reminders for due dates, the ability to track contract line items and fee schedules with HCPs, and other concerns – all enabled by contract management software – take the guesswork and risk out of each phase of a contract’s life cycle.
Pharma & Biotech Experts Can Protect Their Products
All parties should be able to agree on how to approach matters like intellectual property, cost of research and development, supplier chain performance, and whether to address any legal concerns connected with the arrangement. Concerns about patents can be addressed by global governance versus project specific guidelines. In addition, many pharma and biotech agreements are lengthy and complex in nature such as CDAs, CTAs, and contracts with CROs further emphasizing the need for good contract planning.
Energy and Government Officials Need to Respond to Demands in Real-Time
Officers can monitor facility regulations, personnel and information security, potential disputes that can drain time, money, and effort from the project, and considerations that have been written into the project.
Small mistakes in the planning, execution, and adherence to contracts in fields like these can lead to risk and litigation, deleterious consequences for our natural habitat, and threats to public health. A way to avoid this outcome is to adopt and diligently deploy a sound contract management plan and put in place the tools to execute it properly.
Benefits of Improved Business Process Management and Operations
An Opportunity for Risk Mitigation
One of the biggest boons of efficient contract lifecycle monitoring is mitigating risk. Using information gleaned from the plan, staff and other key players will brainstorm ways to achieve certain goals and avoid potential pitfalls, such as:
- over-aggressive expenditures
- unnecessary requests for products, and
- unmet needs for specific services.
Once the risks are identified, assessed, and mitigated, it is easier for senior-level management to focus on how well the project is working.
Increased Program Efficiency and Effectiveness
Contract management software contributes to speed, automation, and ease of operations. Keeping track of the contract’s evolution in a secure, centralized and cloud-based location is a powerful tool for keeping organized. Instead of calling various offices or sifting through documents, shared drives, and spreadsheets to obtain pertinent information, a few clicks will reveal the answers.
Identification of Challenges and Support
Contract management software helps to identify bottlenecks and risks in your process: while your organization may be efficient and following proposed guidelines, there may still be challenges to overcome. It is key to adhere to project requirements while staying focused on critical points of the project. Here are some ways contract lifecycle management can help:
- Automating workflows and contract routing based on your specific business rules
- Maintaining and finding key evidence of potential blockers to success
- Sourcing and producing documents that entail compelling trends that support new contract acquisition or renewal
- Identifying and mitigating threats proactively such as obligations and milestones, instead of after witnessing the result
Contracts are rarely static – how they are carried out often changes and responding to those changes should be simple.
Manage Changes that Affect Outcomes Seamlessly
Effective business process management allows General Counsels, In-House Legal teams, contract managers, CEOs, CFOs, contractors, and all others involved to consider any changes to the parameters of the contract. Implementation of any modifications is much smoother due to a step-wise approach tracked within the software. Contract management software capabilities such as reports, dashboards, automated workflows and alerts, as well as version control tracking provide keen monitoring to pave the way for reliable, targeted results that are measurable and positively affect your financial bottom line.
Smooth Automation of Recurring Processes
97% of corporate board members can benefit from the automation of their projects. Digital transformation of procedures that normally happen manually saves time, money, and energy. Getting involved in the digitization of processes also helps you keep your business abreast of the best technologies for the jobs at hand. With contract management software, you can digitize the entire lifecycle of a legal agreement and its related documents from the moment it is requested or submitted all the way until it is executed and eventually amended or terminated.
Strong Organization Fosters Ease of Collaboration
Lastly, collaborative contracting, both internally and with third parties, offers a win-win solution for everyone involved. It is a prime opportunity to:
- have discussions about best practices
- discover innovative solutions to complications within the project, and
- brainstorm time-saving processes that get contracts executed faster
Having a data-driven contract management software solution with a central repository and real-time collaboration capability encourages ease of information navigation, holistic strategizing, and speedier negotiation and approval of agreements between parties. Any and all changes and communication history will be tracked, dispelling any potential confusion about project requirements.
Contact Us About Your Contractual Needs
Discover what Contract Logix and our products can do for your business processes. If you need assistance with managing the details of your contracts and related documents, we can show you the best approaches to address your goals. Whether your concerns encompass auditing or data migration, resource tracking or more efficient collaboration, our well-trained staff can help you choose a contract management software solution that best fits your circumstances.