Essential Qualities of Effective Contract Lifecycle Management

Essential Qualities of Effective Contract Lifecycle Management

Companies do not exist in isolation but are constantly interacting with external parties including vendors, partners, regulatory bodies, customers, employees or competitors. Considering the complications of such relations, there emerges the need of a mechanism to govern relations and operations that companies are involved in.

As a result, most businesses use contracts to specify the terms, expectations or commitments to stakeholders and vice versa. Contracts form a central part of an organization’s functioning – ensuring that businesses and their stakeholders are adhering to the best practices and standards hence creating strategic relationships.

Given the importance of contracts for effective business performance, it is pivotal to have in place a process that will guide the entire lifecycle of contracts – from creation, negotiation, managing changes, approval, execution, monitoring adherence and obligations, analysis & review and renewal or termination of contract data. Contract management involves the process of methodically administering contracts to ensure financial and operational risks are minimized while maximizing stakeholder’s performance.

Logically, effective contract management drives business performance in organizations. At the same time, unstructured contract management processes lead to costly operational and financial risks.

What Constitutes Effective Contract Lifecycle Management?

Contract Management involves various phases and cycles which can guide the framework of a contract management approach.

The stages include; Initiating requests for a contract, Contract Authoring, Negotiating the Contact, Approving the Contract, Contract Execution, Obligation Management, Revisions and amendments, Auditing and reporting and Renewal/termination.

Much of contract management revolves around lifecycle management. Having a good grasp of the contract management process minimizes the amount of time spent in the administrative tasks while also mitigating risks in a business relationship.

Additionally, for your contract management approach to be more useful, businesses need to implement certain best practices that ease the process of administering contracts.

  • Centralized Storage for all Contracts

Have all your contracts in a centralized repository where you can access all your contracts instantly and that is accessible to all stakeholders. This ensures accurate arrangement & storage of contracts as well as tracking of different contracts, while also providing instant access& retrieval of contract information including terms and conditions, parties involved, approval status, renewals etc.

  • Real-time Collaboration throughout the Contract Lifecycle

The drafting or approval of contracts is often a tedious and time consuming task. One goal of a contract is to ensure each side represented obtains what they’re obligated to in the contract. Through collaboration and communication between different parties involved, a contract can produce terms that are representative of all stakeholders.

  • Facilitate Compliance throughout the Contract Lifecycle

Putting in place an effective contract management process helps in providing the ability to manage or avoid risks and compliance issues through ensuring adherence to regulatory/legal and corporate requirements.

Our Contract Lifecycle Management System enables you to Practise Effective Contract Lifecycle Management

Contracts are essential to your business requirements and thus need to be allocated resources accordingly. With so much at stake, an effective contract management system is equally vital to your business operations. By investing in contract management software, you can turn contract management into a strategic process by eliminating risks while also reducing the manual effort that goes into process management. Our Contract Lifecycle Management platform, eHorizon Mkataba is a secure cloud-based platform that completely automates your processes by allowing you effectively manage contract timelines, to collaborate on all your contracts in real time,  record your contracts’ experience, and ultimately bring uniformity to all your organization’s contracts.

In the process, we not only help your organization to reduce cost and minimize risks but also save a lot of time spent in manual contract administration. Sign up for a free demo today and see how it helps in organizing and managing your contracts.

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