Useful Contract Management Tips and Tricks From the Pros

A contract is a legally binding mutual agreement between two or more parties that highlights their requirements, responsibilities, roles, and expected deliverables.

Therefore, a contract should be respected and obeyed by all involved parties. However, the process of managing more than one initiated contract can be tiring and confusing for many businessmen trying to focus on their day-to-day operations. This is why it’s important to have a robust contract management strategy in place to keep things under control. If you’re struggling with setting up a strategy for handling your business contracts, you’re not alone. In this article, we will provide pro-tips on how to have an effective contract management strategy so that you can focus on running your business successfully.

1. Create a Strong Document Storage and Sharing Facility 

You should ensure the existence of a shared master document library right from the start of the acquisition. You also need to pay attention to the document versioning and categorization. This library needs to contain all the important material for your contracts. The important material refers to any requirements' documentation, the bidder’s tender, the contract, and any supporting attachments, your plans, final evaluation records, minutes, logs, and other material communications. While these materials are only for the sake of future references, you should keep them private and confidential until it’s necessary to share relevant information with providers. They will be vital to proving your point when things go wrong with the contract and the involved parties have to go over who said what and when.

2. Educate Your Employees 

A well-supported contract will have specific documents and contractual obligations regarding some performance indicators that are expected from both parties. Your supplier will automatically abide by these regulations and act according to what’s expected from them; they will also settle sanctions, provided their work didn’t meet the agreed expectations. As a business owner, you should pay careful attention to your employees’ social media conduct. A significant amount of your company’s sensitive data can be leaked due to workers’ social media engagement. Their incorrect social media conduct can also threaten your business’ reputation. Employees usually engage in topics about sports, politics, and other social causes without directing much attention to the fact that they are automatically labeled as part of your business or organization. This normally happens when an employee adds his or her workplace to their social media profile description.

3. Stay Updated with Contract End Dates

Company owners normally neglect contract end dates when they archive their contracts. To lead a successful business, you need to understand that all contracts have a start and end dates as the terms of your business relationships with other partners and suppliers will change with time. Overlooking contract end dates can lead to conflicts between the parties involved. To avoid any unnecessary hassle, look for specialized software that will send contract reminders automatically as you register your active contracts once you get a signature. When you stay updated with contract end dates, you’ll be able to review your terms and conditions and either renew or create a new contract as soon as possible.

4. Establish Clear Post-Contract Information Flow 

This means establishing ground rules regarding the information exchange process between you and your suppliers after all parties have read and agreed to the contract terms. It is normal for business owners to request a level of accuracy and visibility of the information needed to comply with the contract during the procurement. For example, larger contracts usually include open-book accounting as an obligation to avoid dealing with opaque data that barely describes the actual costs and margins for both sides. This is why it’s important to set out clear expectations of costs and hidden margins of intra-provider cross-charges before settling a contract. You should also include an obligation that gives you the right to audit and access open-book data and information during sensible intervals.

5. Evaluate Behavior Before Settling a Contract 

Contracts don’t just represent legal obligations, they also reflect a formal setting between two or more parties. The involved parties may not necessarily act according to the same motivations when seeking success. Make sure you screen your employee or supplier’s behaviors by running some relaxed questions while performing the interview process. This process will help you identify warning elements, whether they are negative or positive, it will also help you find out more about their future performance. 

Contract management is a complex part of any business. With time, you’ll be able to identify your key requirements during the procurement of any contract and set clear terms and conditions that make your life easier. You can always seek help from professionals when interviewing potential employees or providers in order to get a better idea of their future performance and identify warning signs to avoid unnecessary hassles down the line.