Best practices in contract management

  • Last Updated : December 6, 2023
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Best practices in contract management

 

Contract management is becoming increasingly important in today's world as the complexities in contracts continue to grow. In 2023, it’s expected that contract management will continue to evolve and become even more essential to the success of businesses. This blog post will discuss the best practices for contract management in 2023.

Standardizing contract creation using templates 

Standardizing the contract creation process using a central template library eliminates silos among the different departments in the organization and ensures language consistency across all contracts by eliminating human errors, reducing risks, and speeding up the contract authoring and approval process.

Contract management solutions help you standardize your contract creation with the help of a standard templates and clause library. You can also create your own templates and add custom clauses.

Configuring approval workflows 

A contract approval process typically involves stakeholders from different teams, including sales, legal, and finance. The multiple back-and-forth reviews between the stakeholders is time-consuming and makes it difficult to keep track of the contractual changes and the approval status. This reduced visibility into the contracts hinders internal transparency and informed decision-making.

The best solution would be to set up approval workflows where each stakeholder on the team has clear and defined roles. Approval workflows can drastically improve compliance and reduce risks because the stakeholders are aware of the potential risks and opportunities in each contract. Most contract management software allow you to set up workflows for approval based on your organizational hierarchy.

Enabling collaborative negotiations 

The traditional negotiation process involves multiple emails back and forth for changes and redlining. Over the course of negotiations, tracking the changes and viewing multiple versions becomes difficult. This problem can be eliminated by carrying out the entire negotiation process in a single digital platform that lets you negotiate seamlessly with the counterparty by providing real-time collaboration, version comparison, and history tracking capabilities.

Signing contracts digitally 

Wet signatures are now an outdated method of authentication. They're inefficient, difficult to verify, and vulnerable to fraud. Digital signatures are faster, more secure, and can be used remotely, making them much more convenient than wet signatures. Additionally, digitally signed contracts are legally binding, and they're easy to track and audit, making it easier to ensure that all parties are held accountable for their contractual obligations.

Having all contracts in a central repository 

Usually, contracts are strewn across multiple drives, IT systems, or filing cabinets in an organization. Without a central repository, it’s challenging to keep contracts up-to-date, secure, and easily accessible, leading to lost contracts, communication difficulties, and decreased efficiency.

Having a central repository to store contracts with advanced search and filter options makes it possible to retrieve critical contract information effortlessly. It also makes it easier to track and manage all contractual activities and view the consolidated data on a centralized dashboard.

Improving compliance and mitigating risks 

Risk management should be a central part of any contract management strategy. One of the critical factors that result in business risks is unfulfilled obligations. Nowadays, advanced contract management software like Zoho Contracts provides a contextual obligations module to aid businesses in the granular tracking of their obligations and ensuring compliance with contractual commitments.

Additionally, broader compliance and regulatory frameworks also have to be kept in mind. Managing contractual changes arising from frequent regulatory changes is becoming increasingly difficult. Advanced CLM solutions have change management features to help you quickly adapt to the flux in this dynamic business landscape.

As organizations embrace digital solutions, their customers are apprehensive about sharing confidential information. Deleting counterparty data is now a standard clause in contracts, and CLM systems that provide these data protection settings offer better value to their customers.

Performance monitoring and governance 

Traditional systems typically lack automated and real-time performance monitoring capabilities, making it difficult to track progress or identify issues in a timely manner. Moreover, contracts are often highly complex and involve multiple parties, making it difficult to establish a unified view of performance.

A contract management solution like Zoho Contracts helps you monitor your CLM performance in real time and glean strategic insights from contract data with performance-based reports and a customizable dashboard.

By embracing these practices, organizations can ensure that their contract management processes remain up to date and effective. These best practices will continue to evolve as effective contract management becomes even more essential to businesses’ success. Learn how Zoho Contracts helps improve process efficiencies and scale up your business.

 

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  • Akhilraj

    Akhilraj is a writer based in Chennai, India.

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