Procurement Glossary & Terminologies
Understanding Contract Management
The process of managing contract formulation, execution, and analysis is known as contract management. Its goal is to increase an organisation’s operational and financial performance while lowering financial risk.
The effort involved in creating and maintaining corporate contracts can be reduced using good contract management software, enabling organizations to get the most out of their transactions.
Business executives can better uphold their contractual rights and fulfill their obligations when they know what is written in their contracts. A business leaves money on the table if it doesn’t enforce its rights. On the other hand, losing sight of commitments and being caught off guard by them can be expensive.
Stages of Contract Management Process
“Despite the fact that contract management involves a wide range of elements, we can distil the procedure by dividing it into five distinct stages: creation, collaboration, signing, tracking, and renewal.
Stage - Creation
- Initial Requests - Identifying contracts and relevant papers to support the purpose of the contract is the first step in the contract management process.
- Compiling Contracts - Writing contracts by hand takes a lot of time, but with the help of automated contract management solutions, the procedure may be reduced considerably.
Stage - Collaboration 3. Contract negotiation: To shorten the negotiating process, employees should be able to review different draughts of the contract and flag any differences.
Stage - Signing 4. Contract Approval - Getting management approval is the step that experiences the biggest bottlenecks. Users can avoid this by designing customised approval workflows that include parallel and serial approvals and keep decisions flowing quickly. 5. Contract execution: Using fax support and electronic signatures, contract execution enables users to take charge of and speed up the signature process.
Stage - Tracking 6. Obligation Management - Obligation management entails a significant amount of contract management to guarantee that deliverables are met by important stakeholders and that the contract’s value isn’t declining during the early stages of growth. 7. Revisions and amendments - Compiling all the information necessary for the first preparation of the contract is a challenging undertaking. Systems must be in place to modify the initial contract when items that were ignored are discovered. 8. Auditing and Reporting - Contract management does not merely entail creating a contract and shoving it into a filing cabinet without giving it further thought. Contract audits are crucial for identifying both parties’ adherence to the provisions of the contract and any potential issues.
Stage - Renewal 9. Renewal - Manual contract administration techniques frequently lead to missed chances for renewal and diminished corporate profits. An organisation can find renewal opportunities and draught new contracts by automating the procedure.”
Procol can revolutionize procurements for you.
Connect with an expert who can share more about our solutions and answer any questions you have.Get Free Demo