There will be legal and contractual agreements in every industry. One thing is sure about contracts: they will present challenges. Each company will face challenges in contract management. However, there might be a shortage of resources or loose ends when it comes to supervision of the contract life cycle management.
A company that has to sign and manage many contracts is more likely to have minor or major issues. Companies that work in construction and manufacturing, for example, must sign multiple contracts. These contracts include vehicle, raw material, labor, technology, and other contracts. These contracts can present challenges and opportunities to disrupt or interfere with the process. Ensure you get more resources regarding contract management at https://www.contractsafe.com; and sign up to get a free demo.
We will examine the most common problems in contract management to help companies better navigate the process.
Poor Communication Between Teams
Every contract is made up of many parts. This can lead to multiple departments and team members looking at it to make sure it conveys what it intends. This is where the problem lies. The draft must be circulated before it is finalized.
This can cause problems because draft documents can have very little in common with the final product. It can also mean that team members don’t fully understand the requirements.
Intelligent contract management systems allow different users to attach documents, notes, and comments to individual contracts. This ensures that everyone is fully informed. It also leaves a potential audit trail, which is a great bonus.
Lack of Clarity
Where do contracts go after they are completed? Into a filing cabinet? What about a desk drawer? Perhaps even one person’s computer. This is not very useful. How is that possible? How do you ensure that you aren’t overspending or that your contracts haven’t expired or been automatically restarted without your knowledge?
You should review these contracts regularly and allow others to make sure your business runs efficiently. The contract management system allows anyone to view those contracts, (Who those people are will be up to you once the system is set up). You can save money by having the documents found quickly.
Disorganized Management of Renewal and Expiry Dates
Sometimes contracts can be tricky. Contract managers must be vigilant about when contracts expire or are renewed. An expired or missed renewal date can lead to many problems, such as not being able to bill for work performed on a contract or having to pay for the renewal of a tool that you do not use.
This problem can be solved by contract management tools that create automatic notifications or alerts for stakeholders. These alerts will serve as an alert to stakeholders, so they are prepared for contract expiry or renewal. These customized notifications can be sent using an automated workflow in a contract management system.
Avoid The Risks and Terms That Are Not Right
It can be easy to focus on the specific terms or risks of a contract when reviewing it. However, you don’t have to look at the whole picture. Redlining and online negotiation can be helpful. Multiple people can also have access to documents through a contract management platform. By removing communication barriers and making it easy for all parties to access contracts, teams can focus on the essential aspects and manage risk better.
Lack of Flexibility
The lack of flexibility and efficient mechanisms to manage performance can be a significant roadblock in contract management. Instead of dealing with modifications to contracts early, parties often wait until it goes wrong. Digital contract management is transparent, open, and simple to use. This allows for flexibility and communication to be avoided. Cloud-based management makes it easier to adapt to any time or situation.
Hidden Risks Are Easy to Overlook
There are risks involved in every contract. Sometimes a supplier won’t deliver, or the customer may want to cancel. All of these are part of the business. However, it doesn’t mean that you should be stressed about them. Using a CLM software means that you can record what each of these risks might be in conjunction with any contract and always be aware of what might happen. This makes it much easier to create contingency plans in these situations.
These pitfalls can be avoided by using a contract management platform. It provides a single location where one can create, negotiate, sign, and execute contracts. The use of contract technology should be easy, encouraging effective communication between all parties and reducing the chance of error or risk.