Our contract management and administration cover all stages of a contract, from creation and implementation to analysis, in a way that helps your organization improve its performance, boost sales, and increase revenue. It supports the complete customer and sales cycle, as well as the contract life cycle.
CONTRACT MANAGEMENT STAGE 1: REQUEST
Favorable discussions or quotes with a potential business partner or vendor trigger the request for a legal contract. In this pre-award phase, we focus on the reasons for the contract and whether both sides can fulfill the terms.
We make sure that senior management supports the request and the partnership or agreement. Doing this will keep you from running into roadblocks later in the process or killing the project because it didn’t align with management’s goals and strategy.
List of tasks we complete in the first stage of contract preparation:
- Identify the needs of the partner or vendor.
- Understand the background of the contract and the business relationship.
- Establish the goals of the proposed project, deal, or transaction.
- Identify and set expectations.
- Identify, define, and outline the terms to mitigate risk.
- Specify the actions both parties need to take in order to fulfill the agreement.
- Identify the key documents and contacts that will support the contract. (Typically, this information is accessible through an online, searchable library by way of an automated process.)
The inputs at this stage are the goals of the project, the information about the activities that support the contract, and the critical dates. The output is the initial documentation that saves the information and provides an early audit trail.
CONTRACT MANAGEMENT STAGE 2: GENERATE
To create an initial draft of the contract, we research the purpose of the project and be clear about its goals. We gather documents during the quote process or early sales cycle to ensure we have the context we need to generate the contract. Contracts typically change during negotiations, so both parties need to be flexible with the draft. Here are best practices for the draft:
- The draft should be based on the contract request information.
- The draft should include all related documents needed to fulfill the contract, such as clauses, terms, and conditions.
- The draft should use clear and specific wording to avoid ambiguity or misunderstanding.
We use templates with approved language from legal which speeds up this stage and help avoid bottlenecks that can occur when legal has to get involved in drafting every contract. Our automated contract management system contains a searchable database of approved templates, clauses, and other legal documents.
CONTRACT MANAGEMENT STAGE 3: NEGOTIATE
Negotiations should begin with trust and transparency to ensure that both parties have the best possible agreement. In many cases, negotiators use playbooks that break down the contract’s terms, fallback positions, clauses, issue lists, and questions that both parties need to answer during negotiations. Here are the steps in the negotiation stage we usually follow:
- Circulate the draft among internal stakeholders to ensure we’ve addressed all questions and issues.
- Circulate the draft among the partner or vendor’s main contacts to gather feedback and identify points of discussion.
- Review feedback on the draft, comparing versions and identifying the discrepancies that require negotiation.
- Negotiate the terms and conditions, determining what is acceptable to both parties.
- Circulate suggested revisions until both parties reach a final agreement on the terms and conditions.
- Document every change to the contract. (We shrink the review time of these changes by using tracking features in software.)
- Finalize the changes, usually through a term sheet or letter of understanding (LOU) to make sure everyone approves of the terms and conditions before signing the final contract.
- Identify the people who have the authority to formally approve and sign the final contract, as well as other signing details.
When we’re done, you will have a final contract or agreement document that is ready for formal approval.
CONTRACT MANAGEMENT STAGE 4: APPROVE
Once everyone has agreed to the terms of the contract, we get final approvals. Depending on the contract’s size and scope, we may need to include your legal department, key executives and other internal management, external stakeholders, and the customer. The input is the contract document; the output is the final contract approval.
We may encounter another bottleneck when seeking management approval. To avoid that potential obstacle, we make sure we’ve identified who needs to review the contract, and have policies and procedures to confirm the approval process.
Whether we use a manual workflow for approvals or an automated system that routes the contract and sends alerts, you must still oversee the process, so the contract can be completed and you can close the transaction. You can use parallel approvals (gathered by various departments at the same time) or serial approvals (sign-offs that happen in a consecutive workflow) to keep the process moving forward.
In this detail-driven phase of the process, approval tasks and checklists help prepare for the transaction’s closing. We keep records of all the pre-closing, meeting, memoranda, and approval workflows. This documentation also helps you later, during your compliance and audit trails.
CONTRACT MANAGEMENT STAGE 5: EXECUTE
To finalize the deal, all parties need to sign the approved contract. The contract goes into effect with those signatures. At this point, everyone should understand how the contract will work. You can simplify the signature process with e-signatures, especially if you are working with parties in different time zones or on different continents. Next, we give copies of the signed agreement to all parties and store them in filing cabinets or in an online server or document library (where you can search for and manage them).
CONTRACT MANAGEMENT STAGE 6: CAPTURE
Not only the source of truth for everyone involved in the project, each contract also contains a storehouse of data that you can use to grow your business. We gather all the signed contracts and supporting closing documents in a central system, so you can search, track, and retrieve the data. By organizing your documents this way, you can reap the following benefits:
- It’s easy to access for record management, contract visibility, quality assurance and awareness, and complex situations.
- It tags them with relevant keywords for easy search results and document retrieval.
- It structures them for machine-readable or robotic discovery of data, which may include optical character recognition (OCR) conversion of PDFs or JPEGs into text documents that you can search using machine learning or artificial intelligence (AI).
- It stores them securely to protect against theft or cyber attack.
CONTRACT MANAGEMENT STAGE 7: COMPLY
Once everyone has signed the contract, all parties need to adhere to the agreement’s terms and conditions. Failure to meet any performance measures, payment, or reporting can put you in breach of contract and may result in liabilities or contract termination. If you don’t comply with regulations, you can face severe penalties and even damage your organization’s brand.
Throughout the contract life cycle, you need to ensure you are following the contract’s aims and sections (also known as obligation management or commitment management), and be on the lookout for any signs of noncompliance, including quality issues. We do this by tracking and enforcing compliance by ensuring that our records management system is safely storing, accessing, and updating all your critical documents.
CONTRACT MANAGEMENT STAGE 8: REPORT AND AUDIT
Reports and audits help you monitor the progress of a contract and alert you to potential problems and compliance issues. The contract should spell out the scope of any report or audit, but this can be tricky to monitor if the contract itself is stuck in a filing cabinet or desk drawer. With our digital files and cloud storage in a searchable database and contract repository, it can be easier for you to know what you need to track and when you need to deliver the information.
Once you’ve established the best way to quickly and efficiently find the information, consider using an audit or report checklist that includes these details:
- Payment, billing, and invoicing
- Project expenses and spending
- Project milestones and deliverables
- Quality testing
- Customer service
- Systems and documentation used for audit trails
Reports and audits can reveal deficiencies or conditions that put the contract at risk, and you can put strategies in place to eliminate, mitigate, or transfer any potential risk.
CONTRACT MANAGEMENT STAGE 9: REVEIW AND AMEND
Use the information in our reports to review your progress and identify whether you need to make changes to the contract. Establish a plan and time frame to review the performance of the contract. Revisions, changes, and amendments are common in the contract life cycle. Here is a list of typical changes:
- Cost or price
- Scope of work
- Schedule or timeline
- Overlooked items
We use our skills in change management and document management to identify these areas, manage the relationship between the parties, and capture the details of the changes to which both parties agree. Some problem areas may be too severe to solve with a contract amendment. In those cases, contract termination may be the best solution for poor vendor performance or other issues.
CONTRACT MANAGEMENT STAGE 10: RENEW
At the end of the agreement, you have the opportunity to consider extending the business relationship and renewing the contract. We make sure we’ve set alerts before the contract expires, so you can consider your option to let the contract lapse and end the relationship, renew the agreement, or renegotiate and create a new contract. You can rely on the performance reports to identify the best business — and revenue — opportunities, which feed back into the sales cycle.
OUR CONTRACT MANAGEMENT ENSURES MATURITY FOR YOUR ORGANIZATION IN CONTRACT HANDLING
The information in your contracts can help you grow your business. With better insight into the terms and performance of your contracts, you can lower your risk outcomes, improve your sales and renewal performance, and optimize your contract portfolio. The contract management maturity model (CMMM) provides a framework to help you move from a tactical business operation to a strategic approach that enhances your organization’s goals and revenue.
Here are the five stages of the CMMM. As your organization moves from an ad hoc to an optimized approach, you will identify more opportunities for business growth and strategic alignment between your contracts and your company’s long-term goals.
Organizations in this stage have some established processes, but the processes are not followed company-wide. These organizations lack a formal documentation system, and managers are not held accountable to comply with contract management policies and procedures.
These organizations have basic standards and processes, but these processes are required only for complicated, critical, or high-value contracts. They are not used on all contracts.
At this level, organizations have company-wide contract management standards and processes with formal documentation. With a library of standard contracts, managers tailor individual contracts rather than starting from scratch with each new contract. In addition, senior management offers direction and guidance.
At this level, the contract management process is fully integrated with other business functions, such as financial management and systems engineering. The contract team includes end-user customers, and management uses metrics to make decisions about contracts and evaluate parts of the contract management process.
At the highest level of maturity, organizations use performance data to evaluate the efficiency, effectiveness, and quality of the contract management process. These organizations also take a continuous improvement approach to the process, applying lessons learned and best practices with new and renewed contracts.