Contracts are a fundamental aspect of running a business. Contracts guide and govern your organization’s relationships with employees, partners, vendors, and customers.
Contract management is the process of managing an organization’s legal contracts. Effective contract management guarantees that all business operations benefit all parties involved and minimize the potential for litigation and liabilities. Often, businesses will outsource this process to an outside company.
This article will give you a basic understanding of the contract management process.
What are the Steps of Contract Management?
Contract management follows seven steps.
During the initial stage of contract management, the party responsible for contract management will evaluate your need for a contract and provide guidelines for what you can expect during the process of creating a contract. Organization and preparation are critical. You should be prepared to outline your reasons for requiring a contract and identify potential risks that could arise during the process.
A contract management consultant often works in partnership with an attorney to ensure a contract is as complete and accurate as possible from the first draft. All wording must be precise without any room for interpretation.
While drafting a contract, you must attempt to anticipate the other party’s needs and wants. Even the most thoroughly prepared contract will require some negotiation with all parties involved. Review the contract together and adjust the contract as needed until all parties are satisfied.
Approval of the contract comes after a successful negotiation. When all parties are satisfied with the contract, all necessary parties can approve it. It can be helpful to identify all parties who will need to approve the final contract during the initiation phase. In many cases, this may include members of upper management and the company’s in-house legal team.
After completing negotiations and approving the contract, all parties must sign the contract–also called executing the contract. People can sign in person if all parties can be present, or you may use one of many available e-signature applications. Once all parties have signed the contract, you must make copies and distribute them to all involved parties.
A contract is not written in stone. As new, unanticipated situations arise, you may amend or revise the contract to reflect the necessary changes. This process can be complicated, but an effective contract management process can reduce much of the confusion.
The final stage of contract management occurs after the contract is negotiated, approved, and executed. An essential aspect of contract management is regular evaluation. It’s critical to ensure all parties comply with the contract’s guidelines and pay attention to deadlines outlined in the contract.
Contracts may also need to be renewed. Avoid missing renewal periods because they can result in missed revenue and opportunities to build relationships with your partners.
Find Corporate Law Consulting
Don’t leave something as essential as contracts up to chance. Find knowledgeable corporate law consulting services by contacting the knowledgeable team at Intuitive Edge. Our consultants provide the practical, thoughtful contract management services your business needs to thrive. Reach out to our team to learn more about our services.
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