The Ultimate Contract Management Guide
Most companies spend a lot of time, money, and effort to negotiate the best possible contracts. All of this effort is for nothing if the negotiated contracts with their critical clauses are not available by those who need them when they need them in your organization.
The importance and difficulty of managing contracts and contractual agreements, in general, have risen significantly. Changes in business practices have pushed organizations to have more business relationships and (written) contracts. This increase in complexity means that using manual, ad hoc style contract management is no longer sufficient to meet corporate needs.
When we manage contracts, we manage our business relationships, what we have promised and what has been promised to us. It does not get more important than that.
Manual contract management is labor-intensive. Creating, executing and follow-up takes a lot of time from several highest-paid professionals in the organization: CEOs, legal and procurement personnel, CFOs, and business owners. The manual and repetitive processes needed to create and find contracts, often run via email, possibly with the help of Excel, kill productivity.
In addition, studies have shown that manual contract management is highly error-prone, leading to unnecessary costs, missed deadlines, and severe compliance issues.
All business relationships rely on contracts. When we manage contracts, we manage our business relationships, what we have promised and what has been promised to us. It does not get more important than that.
What is contract management?
Contract management is the process of managing contract creation, execution, and follow-up of the operational performance of the business contracts. Contract management is almost interchangeable with the term Contract Lifecycle Management (CLM). Each contract has a limited time span, after which the contract is either renewed or terminated.
The key activities involved in contract management are either focused on a single contract or on a set of contracts at a time.
These activities include drafting, clause negotiation, performance analysis to maximize financial or operational performance, and risk mitigation. Performing all of these activities is challenging without a systematic approach. Each contract can go through a set of stages and responsible persons in your organization, with each handoff posing a risk of miscommunication.
Contract management is about managing the upside and the downside of your business relationships. Without modern contract management, you’ll have challenges getting the most of your contracts, and your company could face financial penalties and other contract-related compliance issues. Well-managed contacts lower the risk level.
Table of contents
- Contract management process
- Contract management process steps
- The pre-signature phase
- The post-signature phase
- Contract management process steps
- Contract management workflow
- Contract management best practices
- Contract management plan
- The best contract management software providers
- In conclusion
Contract management process
A contract’s lifecycle is commonly divided into two phases, the pre-signature and the post-signature phases of the contractual process. Both phases are critical, and they come with their own sets of challenges. It’s not uncommon to see two separate sets of people working on the contract with the sales or procurement team and the legal team negotiating the contract, and a totally different group of people using the contract to conduct business after it has been signed.
Contract management process steps
The pre-signature phase
The pre-signature phase starts with contract initiation and covers the authoring of a contract, followed by negotiations, editing, and different kinds of approvals. There are many types of business relationships. Many of them will have their set ways in the pre-contract phase, with differences in which party typically authors the contract, how much leverage each party has in the negotiations, and how template-based the contract will be.
Every procurement event or sales activity comes from a one-off or repeating business need. For example, you need larger office space, your job is to sell SaaS contracts or buy sales support services from an external partner. Recognizing the need for a contract is the beginning of the contract lifecycle.
In summary, a contract is an agreement between two parties that creates mutual legal obligations enforceable by law.
1. Contract generation
A contract is first written, either from scratch, based on a template or by using an integrated system that fills in some parts of the contract template from another system, such as a CRM system.
Negotiation typically involves sending a contract draft back and forth between the parties with proposed changes and amendments until both parties agree to the contract. Even though most parties use electronic means, such as email or online Microsoft Word documents, to speed up the process, it is time-consuming or very time-consuming.
Most parties use email or cloud-based systems to route the final contract to the other party, but depending on the industry and the country, using physical mail or courier services to deliver actual printed documents is not uncommon.
4. Approval and signing
Approval is more complex than one would like. A typical important contract has several layers of hierarchy and different departments involved prior to the final approval and signature by the responsible manager. What looks like inefficiency and unnecessary delay from the outside, can be a bee’s nest of activity when seen from the inside.
The actual signing of the contract can happen via a physical signature and return of a signed document, a physical signature and an email of a PDF of the signed contract, or a straightforward digital signature of the contract on a cloud-based platform.
Contract execution is somewhat confusingly used to describe the act of having all the signatures on the contract, the act of actually performing the work defined in the contract - and also both of the aspects.
In any case, the contract is legally binding after it has been signed, and both parties need to abide by the commitments in the agreement, or they can be found to be in breach of the contract in a court of law.
A modern contract management system will help execute the contract, i.e., delivering or procuring the good or service the contract refers to. A best practice is to unify the most common parameters of your contracts into set fields or categories and use these to assist your team to quickly understand your commitments or options under the business relationship.
This set of fields and categories, together with crucial dates relating to the contract, the signatories, and sets of counterparties, is called the meta-data of the contract. (Meta-data means data on data.) A good set of meta-data and a system that can take advantage of these make processes more straightforward and efficient than a manual process without a central repository of contracts and their data.
The execution phase requires user rights management functionality that fits your corporate needs. It should be easy to give and remove rights from users based on a variety of criteria, and you should be able to manage most rights based on a group the user belongs to rather than working them user by user. In addition, some of your managers may have access to all or almost all of your documents.
A contract management system in the cloud is superior to the typical approach of storing your contracts on a shared server as you can deny access from all of your staff members if needed, IT staff included. This can be crucial in ensuring that all your contracts can be managed using the same processes, even the most confidential ones.
The post-signature phase
The post-signature phase covers managing and enforcing the contracts that have been signed. Important post-signature work includes renewals of contracts and amendments to contracts along the lifecycle of each contract. It’s not uncommon for the most important contracts of organizations to have tens of amendments or additional appendices that were not part of the original contract.
This part of the process is ongoing throughout the length of the contract. Nothing is easier than forgetting this work. If you deal with a massive volume of contracts, missing a deadline or forgetting a price change exception can be extremely costly to your organization and your career.
Keep in mind that most companies are fundamentally run by the contracts they have with their business partners. In some industries, more than 80% of all operations are based on the work done by others based on the contracts you have negotiated.
Post-signature makes contract management shine. For each contract you’ve entered into the system, a modern contract management system (also known as a contract lifecycle system) will send you notifications to ensure that you and your team remember to act when needed.
Contracts can be stored in a variety of ways. Still, the three most common systematic approaches are 1. printing the contracts and storing them in filing cabinets, 2. storing PDF-versions of the contracts in separate folders in a digital file system, or 3. a particular cloud-based contract management system.
Unsystematic approaches are common; some contracts are stored systematically, but most contracts and their change orders are uncategorized and mainly in individual email inboxes.
You should track the performance of each business relationship and contract on a number of axes, but strategic and tactical from time to time.
Strategically you should have an understanding of each contract and business relationship. For procurement, a well-regarded tool is a Kraljic matrix by Peter Kraljic. On the sales side, different industries have come up with different approaches such as total lifecycle value, estimated annual profitability, or just a simple categorization based on annual contract value.
On the procurement side, the Kraljic matrix is based on using both your contract management tool and your understanding of the business to categorize your supplier on two axes.
Firstly, what’s the impact on your corporate profitability from the goods or services procured, and secondly, how hard to replace the goods or services are estimated to be.
After the process, often an annual one, you should have a clear view of your critical relationships and where your goal is short-term profits and where your risks are higher, and you need to play a longer game to succeed.
Auditing your contracts on a regular basis is essential to ensure that you are receiving or delivering what was promised, i.e., that each party was compliant with what you had agreed to.
Your contract audit ensures that both intentional and unintentional discrepancies are found when implemented in full. As a result of the audit, you may find yourself changing your processes, highlighting issues in a particular contract, or in the case of intentional discrepancies ensuring that you get what you deserve in a court of law.
Your first goal should be to find a time of the year when the key personnel involved in the audit are available for audit. It’s not uncommon to avoid the end-of-year reporting and tax seasons as the same staff will have their hands full. Your internal team can perform audits, but the best practice is to separate the audit staff from those who negotiated the contract and use it in their day-to-day work.
The next issue is to decide on the scope of the audit. While it’s possible to audit just a single contract or all of your contracts, most audits try to cover a set of contracts with a common theme during a single audit cycle.
Your contract audit ensures that both intentional and unintentional discrepancies are found when implemented in full. Your first goal should be to find a time of the year when the key personnel involved in the audit are available for audit.
You also need to decide what you’re looking for. A full audit of a contract from all possible angles is prohibitively expensive unless you have reason to believe misconduct on the part of your own organization or your counterparty. It’s more typical to audit a set of contracts with either a cost recovery or under-invoicing approach or to find a specific type of non-compliance by a party.
The goals of the audit are both direct and indirect. Direct goals include rebates or additional delivery if your counterparty has overbilled or underdelivered. Indirect goals are about ensuring that your staff and your counterparty are diligent in managing the business relationship as they know that the contracts can be audited and due recourse will be found.
Sometimes the compliance or payment audit elements may result in suspicion of fraud. This is often covered as a separate audit done in a manner that creates evidence of fraud that can be used in court proceedings.
Reporting on your contracts involves understanding your contracts and your business relationships. The larger the set of contracts, the more your reports can help you focus your efforts on those relationships, where the most significant gains can be made.
The most important reports are related to your contract lifecycle, especially if your contract management system is not set up to alert you in advance. A large share of business contracts have clauses requiring you to act by specific dates to renegotiate or ensure that you keep receiving services. Having enough time to understand your options and to renegotiate the contracts if need be is crucial.
Reporting on performance is just as important. Your KPIs will depend on your business environment. Still, they may include things such as understanding how much of the spend is related to a particular contract, how much you use external services, how difficult and costly the agreement was to negotiate and to maintain, etc.
A sound contract management system will help you with your reporting needs as it becomes the authoritative source of information on your contracts and the hub for your reporting needs.
Reporting on your workflow uncovers opportunities for efficiency. Understanding the types of contracts or departments, who need an extraordinary amount of time to authorize contracts, can help you find ways to mitigate these bottlenecks.
Changes in the business environment will immediately require reporting. Often in dimensions, you had not thought about. Typical issues in this reporting scope include country-specific risks in the supply chain or counterparty risks related to a whole enterprise and all of its subsidiaries. In cases like this, you need to sort the wheat from the chaff, understand which contracts are the riskiest, and find mitigations to the newly encountered risks.
A similar case in the mergers and acquisitions space. When you merge with another company, you need to be able to find the most advantageous contracts and counterparties and the new high-risk contracts.
Likewise, as your suppliers use M&A to move forward, you need to be able to gather contracts from all parts of your enterprise to be a step ahead in your moves.
Shrewd negotiators always know when the contracts in their portfolio are up for renewal. Depending on the type of contract, you may need a lot of time to consider your options, and if you leave the decision to the last moment, you may have no alternative to accepting the terms you are offered.
The best time to decide how much time you’ll need for renegotiation is when you have initially signed the contract. In a small team, this can be the manager’s job in charge, whereas, in a larger organization, you’re going to want to create guidelines and categories to ensure that everyone is on the same page.
Using the Kraljic matrix may also help – the more critical a contract is for your success, the earlier you need to prepare for the renewing phase.
Some of the crucial elements to consider, no matter how simple the contract is contract length and how it should be renewed the next time. You’re trying to find the balance between the benefits possible via frequent renewals and the time and cost involved in the periodic renewal process.
You should also understand what the quality of products or services has been and how the price relates to current market conditions. If you’re not satisfied with what you’ve been delivered with, you need to consider your options and either try to negotiate a better quality or start shopping for alternate vendors.
Getting a second opinion on price is never a bad thing in contract negotiations, and sometimes it can be the only reliable way to understand your current pricing. This creates a position of strength as you know your options.
6. In conclusion
Contract management and contract lifecycle management can be reduced to these stages and preparing for them. If you have a good understanding of your portfolio of contracts and your negotiation, editing, approval, tracking, auditing, and renewing process is efficient and effective, you are in an excellent position. (By the way, a contract management system does not have to be costly or difficult to use. ContractZen costs $9.50 per month per user and is easy to implement and use.)
Contract management workflow
In the next phase, the actual document, the contract, needs to be written. Typically the first version of the contract is considered a draft, and there are several iterations until the final agreement is reached.
The more complicated the business environment or the nature of the agreement, the more labor-intensive this process is, and more iterations are common.
Suppose you are responsible for authoring the contract. In that case, a beneficial position to be in, the most crucial element of contract management is having access to possible corporate templates and examples of prior similar contracts.
There’s evidence to suggest writing contracts in an easy-to-understand fashion makes the next stage, negotiation, more efficient than using legal jargon, even though the latter is more common in many domains.
Negotiation is typically done in two stages: first, an agreement on the main terms of business is reached, followed by negotiation of what can be considered the legal terms or details. Negotiation of the main terms of business can sometimes be done orally. In contrast, negotiating the rest of the contract, i.e., legal terms, is always done in writing, typically by sending the same contract back and forth until an agreement has been reached.
This approach is efficient as if there is no agreement on the main terms of business, including the price and the goods or services to be delivered, there’s no need to continue further in the negotiations.
At the end of the day, any part of the contract can wind up being crucial. While it makes sense to first agree on business terms or find that no agreement could be reached, almost any part of the contract can change a positive business outcome to a negative one if not carefully considered.
Most negotiators can be categorized as either adversarial or collaborative. Adversarial negotiators make for great television, but in real life, many experienced negotiators try to find a mainly collaborative approach to the negotiation.
Your approach to negotiation depends on what your best alternative to no deal (BATNA) is. If the other party can sense that you are willing to walk away from the negotiation, you’ll be in a better position to negotiate for yourself and your organization.
Approval of contracts is the seemingly simple phase of getting the contract signed by all parties involved. A seemingly clear-cut result from a negotiation needs to be considered in the bigger picture of all the alternatives, resources available, and the organization’s ever-changing needs. In practice, the approval process is complex as the signature involves a commitment.
It’s not uncommon for the final decision maker to take their time to go through both the budget and the contract in detail and the organization’s objectives prior to signing. Finding time to gather all the material needed for this may take time.
Approval of contracts is a typical organizational bottleneck. It results in lost opportunities as business relationships are not available as soon as they are needed, and business opportunities are lost as the prolonged negotiations may discourage potential business partners.
A lot can be done to speed up the process, with electronic signatures and contract management archives of pre-existing agreements being the two most important ones.
The electronic signature approach speeds up the practical element of sending physical contract copies by post or courier. The contract management archive ensures that the contract is truly needed much faster.
Sometimes the bottleneck can be the uncertainty around the actually needed signatories. The best practice in the negotiation phase is to make sure that the persons with authority to sign are known from both parties.
Contract management best practices
Decide what team will be in charge of your contracts. Typically, it is your legal department, but sometimes the contract management system is purchased by sales, finance, or even customer service departments. Their heads may be a better fit, at least in the short term.
Plan your implementation approach in a way where you get so-called quick wins from your implementation project. This will typically mean all new contracts for a small business. But for a larger team, the first steps may consist of all new sales contracts or only all-new procurement contracts.
Understand and streamline your contract approval process.
After your initial success, keep moving forward and help teams understand the real return on investment in moving to the unified contract management system. The real sales wins often come from faster time to sales, whereas the procurement benefits can be driven by compliance.
Think hard about the real business benefits you can expect from integrations. If implemented properly, a tighter bond between CRM and contract management or ERP and contract management can be crucial or a total waste of time and effort.
We are way past the tipping point for on-premise implementations. They would require you to manage servers, backups, and many things you don’t need to think about when using cloud computing approaches.
This may seem obvious, but make sure you make the contracts available to all the team members who need them. Running a relationship without needed access to contractual agreements is impossible to do well. Use your contract management tools to categorize and group users into groups to make this practical for every contract.
Make sure it’s easy to draft contracts and add them to your contract management system. Any unnecessary complexity will result in a smaller share of the contracts being captured in the system and a lower benefit for your organization.
Maintain a set of pre-approved contract templates for the kind of contracts you need over and over again. In a small organization, you may rely on third parties for your templates. Often the templates exist in your organization. You just need to gather them and vet them.
Make sure you make the contracts available to all the team members who need them. Running a relationship without needed access to contractual agreements is impossible to do well.
Try to understand and streamline your contract approval process. Create ways of working to risk adjusting the approval process to align with the kind of contracts your organization processes.
Start using the automated features of your contract management system from the very beginning. A simple alert of renegotiation can save a lot of time and effort, and learning to use this is one of the most important benefits of a contract management system.
Starting to use a contract management system is a natural time to ensure that everyone is using the same systematic process with contracts. It may require creating new written instructions, understanding your organization’s whole contract space, and understanding the differences between small and large impact contracts.
Use e-Signatures for both business and contract management benefits. Using electronic signatures for the vast majority of contracts, where it is legal, speeds the process even further and creates a tremendous amount of saved time. This efficiency gain comes with benefits on the contract management side. A well-integrated e-Signature subsystem will ensure that storing ready-to-sign contracts and final copies with signatures take no longer than storing the draft.
2. Think long term
You can do a lot just by making sure you are armed with a prediction of supply and demand. In many organizations, the staff is responsible for one or the other, but not both. It may require some effort to get your hands on these. Supply and demand are rarely in balance and understanding the current situation helps you concentrate on the half that is currently the bottleneck - and possibly even find options and alternatives that can help relieve the bottleneck.
Find sources of market intelligence for your high-volume contracts. These may already be available in your organization or may require procuring from an external source. Your approach to renegotiation or using contractual options for extending the contract is often largely dependent on the pricing on the contract vs. the current market price. Some studies show that only roughly half of the organizations have an ongoing knowledge of market pricing. Being the party that always does, comes with great opportunities.
One of Toyota’s key approaches to becoming the #1 car manufacturer globally has been regular ideation with business partners. By having your suppliers pitch you with their best ideas and using them to improve your business relationship, you become more valuable to them as they find approaches to make you more competitive.
Ensure that you measure your relationship and have a set of KPIs to match. As a purchaser and a supplier, you need to ensure that you have a comprehensive set of metrics for your collaboration, even if your counterpart already does the same thing.
Measuring is complex, and you need to understand if your relationship is up to par. This is especially important when your counterpart complains, as you have your own metrics that you can use to make sure that that complaint is valid or prove that the transaction is compliant.
Sometimes you may uncover sinister elements in what your counterpart is used to doing by ensuring that you measure what’s important and doing this on a timely basis.
What does not need to be audited should perhaps not be in agreement either.
As obvious as this seems, check all the invoices and use both your contract and bills of lading to verify you are getting what you deserve as a purchaser. Make sure that the current pricing is used and tally up your costs from your supplier to understand the actual cost of the relationship. Knowing what the total cost of service delivered is, do use regular benchmarking work to understand the actual market price of the service.
Don’t just measure the other departments, do it for your own process as well. Good KPIs include the time to contract to sign, the number of changes needed per year, the number of contracts renegotiated on time, and the number of contracts managed by a member of your team.
A contract management system should be implemented in a way where all your critical KPIs improve every year. Set clear annual goals as this will help you reach them.
Your own KPIs make benchmarking with a similar corporation in a similar industry very useful. The goal is to uncover the differences between the processes and find the best practices you should use.
Be diligent with your documents. Don’t just save your contract, but make sure that both pre-contract and post-contract paperwork that can be necessary for further negotiations is stored, preferably in your contract management system.
Good KPIs include the time to contract to sign, the number of changes needed per year, the number of contracts renegotiated on time, and the number of contracts managed by a member of your team.
An RFP can be worth its price in gold in a court of law, just like a comprehensive set of timesheets. In addition, pay attention to the documents you use as a supplier to show that you’ve actually delivered what was agreed to. Keep the signed sign-off from the client in your contract management system!
Audit the compliance of the parties in the contract. As a rule of thumb, what does not need to be audited should perhaps not be in agreement either. A regular set of audits with varying areas of intense focus help drive home that you expect both parties to be compliant.
Nota bene: auditing is a two-way street; as you audit, pay attention to your team and ensure that they also abide by the contract, as this creates long-term trust in you as an organization that values what has been agreed to.
Find the contracts and teams that have a longer than normal approval process and find ways to help these teams and/or concentrate on these contracts. A long negotiation process requires a lot of resources, is more error-prone, and can make your organization lose to more agile players in your industry.
From time to time, check that everyone is using the system. A simple report or view of the last login time can make the laggards who need more help and motivation obvious.
Spend time and energy on your business relationships. Even when things are going well, ensure that you regularly meet and truly listen to the other party to understand how your relationship could be even better. This investment in your relationship can really pay off in the long run.
Spend time with your peers in different departments that touch the contract management and contract lifecycle space. Make sure that you understand the needs and desires of your colleagues to create a system of operations that works for everyone. This will not happen by accident but requires thought and collaboration.
It’s not uncommon to have challenges with services or goods delivered under contracts. The best practice is to immediately spend sufficient time understanding the differences and reconcile the situation as soon as possible. Make sure that everyone honestly gets heard and make sure you know exactly what was agreed to in the contract negotiations and if there were any changes to this post contract.
The better your situational awareness is, the more likely you will quickly find a solution and save a lot of money and resources.
After the situation is resolved, talk to your team and brainstorm how your contracts should be amended to ensure the same issue won’t happen again. Perhaps your contract templates need more definitions of phrases or more precise service level agreements (SLAs.)
5. Manage change
Approach business requirements to change or amend contracts with a zen-like attitude. Change is normal, and doing what was agreed to even when the world has moved on would be idiotic. Ensure that every change order gets documented in writing and stored with the rest of the contract so that it can be taken into account in your processes.
Sometimes you may feel the change should have been evident in contract negotiations. If so, spend some time in self-reflection – what could I have done differently so that the contract would have been nearer to what we needed?
Make sure that you have time to consider each important contract often enough. Just picking up the contract in your contract management system may be sufficient, but having a checklist for reviewing the contract from a risk perspective is even better. Remember that risks come in many categories.
Suppose you feel a specific category of risk is increasing. E.g., the availability of a particular raw material or part is becoming a bottleneck, concentrate on the contracts that this change in the environment affects.
Risks that affect a large number of contracts simultaneously typically require immediate executive attention.
Make sure that you understand the value at risk, even if this may require a meeting with senior management, as a seemingly low-value part can be impossible to work around on a short time frame and cause extreme losses if not available.
Contract management plan
The World Bank has very detailed but practical guidance for contract management. Their wonderfully practical advice for contract management planning is:
“Too many checks and balances can result in an overly bureaucratic culture that can delay decision making, impede contractor payments and stifle value engineering and innovation. Too little control can result in an undisciplined crisis management culture. Getting the balance just right is the key to success in “fit-for-purpose” contract management.”
All this means that planning how, when, where, and by whom a contract will be implemented, monitored, managed, and administered is essential but cannot be a one-size-fits-all approach. A strategic IT system will require full-time contract management and a set of varied experts, whereas a simple delivery contract for office supplies requires less planning.
Typically a contract management plan is ready either by the time of signing the contract or slightly after that. There’s nothing wrong with using the same plan as before if the contract is for a good or service like the prior purchase and the initial plan was fit for use, and your organization knows its approach well.
As an extra tip, consider using the name Relationship Management Plan if it sounds like a better fit for your organization. A contract management plan may sound a bit bureaucratic for smaller organizations, but everyone can appreciate you planning how to get the most from business relationships.
Contract management plan template
The following list the World Bank proposes for the contract management plan is a suitable contract management template for project-delivery types contracts of mid-to-high complexity in most industries.
In almost any organization, a large number of these points relate to your standard contract terms and are taken into account prior to signing the contract. Many of the others can be covered with just a pointer to your project management standard operating processes valid as of the date of signing. Your contact management plan is as much about planning as it is about identifying the critical parts in your contract and documenting them in the most easy-to-understand format possible.
You may want to customize your contract management system so that some of the key provisions of the contract management plan are shown as properties of the contract itself, and the rest are an appendix stored with the contract in the contract management system. Many contract management plans are shared with the counterparty or all key parties in a more complex undertaking. Remember that you need to use your contractual provisions to get the other parties in the relationship to act according to your plan.
The more complex your organization is, the more important the contract, and the longer you expect the contract to be in force, the more you should document in the contract management plan itself. This will ensure that your organization will have a clear and unambiguous understanding of what needs to be done at all times.
Sample contract management plan template
(Note, your typical contract will require some but not all of these elements)
- Contract management roles and responsibilities listed
- Ensure that each party has established the necessary authorizations and delegations for its personnel at the beginning of the contract as this is an essential prerequisite to ensuring that all contracting decisions are valid and enforceable
- E.g., the names and contact details of the key contacts
- This would typically be your contract management system
- Who gets to decide what? What will require further authorization, and from whom?
- Preferably include a diagram showing the key parties, the hierarchy, lines of reporting, etc.
- including key contractual terms and conditions
- A list of milestones, associated deliverables, and start and end dates.
- Including the critical path, if this a multi-stage project with parallel tracks;
- KPI, the target value, who/how it’s tested, and how the tested values are validated
- and a description of the standards or measurement process, if relevant;
- identified and adequately described, and updated to account for change orders during the execution of the contract
- N.b this may be redundant, if well documented as a part of the milestones
- types of reports, times, contents, etc. and
- lines of reporting;
- Consistent with contractual provisions;
- Remember to document the documentation requirements, your verification process, approvals, and the time to payment, if separate from what is typical in your industry.
- Who is responsible for keeping records of each identified type of record.
- These can be financial, technical, or other compliance requirements
- Typically multi-level, with some authority vested to the contractor, others to different levels of authority in the contracting organization.
- Typically based on the criticality of the issue, with more critical issues requiring a faster response time and visibility to a higher level of authority.
- Approaches to issues seen possible in advance, with the remedy used and the risk related to missed compliance.
- A simple table with identified risks, their likelihood of occurrence, mitigation, responsible people, etc. is more important than a long, non-practical document
- Who, what, how, and why
- What kind of comms, why, in what format, how often, and by whom
- Activities and responsibilities required to close the contract in an orderly fashion
To turn this generic template suitable for procuring or selling almost anything into your organization’s template, we propose cutting out the parts that just are not relevant for your work, documenting the aspects that always get done in the same way directly into the template. This will create the most straightforward possible plan that will also work as a perfect agenda for an eventual kick-off with your business partner.
Planning and acting early is one of the great contract and relationship management hallmarks. Having a clear, easy-to-understand plan that is communicated to all parties comes with several benefits. It is also essential to ensure that everyone is on the same page on all key parameters of the work. How it’s shown to be done, what needs to be done for work that has been completed to result in payment, and so on.
This joint agreement means a lower likelihood of wrong delivery and thus a substantial opportunity for cost savings. As the plan specifies both the expected case and the approaches in cases of disagreement in a clear to understand language, it works as a preventive measure to disarm conflicts in the process.
In addition, a plan means that different parts of the associated staff can work independently without communication with your responsible contract person. This results in efficiency and possible time and cost savings as well.
The Best Contract Management Software Providers
Companies of different sizes and thus complexity need different types of contract management systems. The key differentiators are, for example, the feature set, security, price point, and ease of use.
Modern contract management tools help eliminate unnecessary manual processes and give decision-makers an up-to-date overview of the entire contract base.
Our recommendation is: decision-makers should have smooth access to all critical business documents – anywhere, on any device.
There is a broad selection of software for different needs and every phase of the contract management lifecycle. To help you compare the available software, we compiled here below a list of ten powerful contract management software vendors:
ContractZen’s easy-to-use and secure governance software with pricing suitable for any organization consist of advanced contract management software, 100% paperless board meeting management, effortless entity management, seamlessly integrated e-signature providers, and built-in virtual data rooms (VDR) - all in one. Cloud-based, built on Microsoft Azure Cloud. Start your 30-day free trial now.
ContractZen contract management software pricing: $9.50/user/month
Concord is a contract management system that helps all companies manage the entire lifecycle of their contracts—from creating contracts all the way through managing renewals post-execution. Approval workflows enable multi-step and conditional approvals for any contract type. Cloud-based.
Concord contract management software pricing: starts from $17.00/user/month
The solution consists of Conga Contracts and Conga Contract Lifecycle Management. Conga Contracts is designed for a single department within organizations or for small- to medium-sized businesses. Conga Contract Lifecycle Management is built for leading enterprises looking to optimize highly complex contracting processes that span multiple departments. Cloud-based, built on Force.com.
Conga contract management software pricing: Hidden
Contractbook Contract management solution helps organizations of all sizes create, share, and store legal documents and contracts. Key features include configurable document approval workflows, templates, milestone tracking, and version control. Cloud-based, built on Google Cloud. No free trial.
Contractbook contract management software pricing: starts from $395.00/month (unlimited users).
ContractWorks features easy drag-and-drop files to store all agreements in one searchable, scalable, secure contract repository with a SOC 2®, Type 2 report. Control who has access with permission-based user roles. Free trial, built on AWS.
ContractWorks contract management software pricing: starts from $600.00/month (unlimited users).
DocuSign is a cloud-based electronic signature and contract management solution. The platform can be used to sign various types of documents including business contracts, school permission slips, agreements, and approvals. DocuSign CLM has no free trial, and it's built on Microsoft Azure.
DocuSign contract management software pricing: Hidden
ICI contract management platform covers the full lifecycle of contract management capabilities beginning with intelligent contract setup and then continuing with authoring, approvals, negotiations, and all other aspects of ongoing contract operations. Cloud-based, built on Microsoft Azure.
Icertis contract management software pricing: Hidden
Ironclad is a web-based platform that helps companies to create, automate and manage workflows related to contracts and agreements. It provides a self-service portal for users to design and customize templates to quickly build any type of contract. Cloud-based, built on Microsoft Azure.
Ironclad contract management software pricing: Hidden
LinkSquares Contract Lifecycle Management (CLM) solution built specifically for in-house legal teams. You can build a customized contract creation workflow and track every contract from start to finish on the contract lifecycle. Build on Amazon AWS.
LinkSquares contract management software pricing: Hidden
PandaDoc offers their electronic signature platform for sales teams, containing sales proposal automation and CPQ (configure, price, quote) features, and integration with CRMs. PandaDoc has also a document and contract management solution designed to automate the contract management process. Free trial, built on Amazon AWS.
PandaDoc contract management software pricing: starts from $19/user/month, Business Tier $49/user/month.
The Best Contract Management Software for Small Business
For small businesses the ease-of-use and the pricing often are the most important decision-making factors. Here’s the top three contract management software solutions for small businesses and nonprofits.
ContractZen contract management software is easy to use, easy to navigate and easy to understand. Find documents immediately with Microsoft AI-powered search, stop worrying about important due dates with the help of automated reminders and import contracts by simply sending an email. The great user experience guarantees that people will use it. ContractZen is ideally priced for SMBs and non-profits around the world. Free trial for 30 days.
ContractZen contract management software pricing: starts from $9.50/user/month
Precisely’s end-to-end contract automation platform is developed by legal experts. This software lets anyone easily create compliant contracts. The solution aligns the legal department with the rest of the business by enabling the business side to be more self-sufficient. Free trial for 14 days.
Precisely contract management software pricing: starts from $62/user/month
All-in-one contract automation that enables users to create, approve, sign and manage contracts in one unified workspace. Juro is a cloud-based, in-browser solution that integrates with the systems that businesses use every day, including Salesforce, Google Drive.
Juro contract management software pricing: $499/month (50 contracts per month, includes 3 users
In conclusion, contract management is in an interesting stage. What has been seen as a dull backwater of paper-pushing bureaucrats is a bustling pot of innovation and new software solutions—using a centralized software solution results in tangible business benefits to the organization and its departments. It enables creating an internal centralized contract management system to look at risks and benefits across departments, suppliers, and contracts. If you have not started with systematic contract management, don’t worry, this is as good a time as any. Find the best approach for your organization to get all the critical documents in one place to start your systematic journey. Your reasonable first step could be a department with their hair on fire due to contractual issues or the volume of contracts. Or perhaps you can start with contracts from a department such as the IT department that is naturally predisposed to prefer using novel SaaS-type digital solutions.
If you are new to contract management and feel like there’s just too much information to digest, you might want to consider an online course as a first step. Udemy has many inexpensive short courses on contract management - many focusing on a particular industry. Coursera has a free beginner level approximately 9 hour Rutgers university course on procurement, with part of the course focusing on contract management. The University of California runs a 6–18 month online course and many many more.
We’d love you to try our ContractZen SaaS solution. Start your 30-day free trial today and invite your colleagues (as many as you like!) to try it as well. Godspeed!