The seven stages of the contract management process.
Initiation. The first step of contract management is to know the reasons you need to enter into a contract. Outline your goals, risks, and expectations from the start. This will make every stage of the process flow as smoothly as possible.
Negotiation. During contract negotiation, both parties meet to work out the contract terms, so that the partnership is as mutually beneficial as possible. At this stage, to acknowledge their intentions to formalize these talks into an agreement, the parties might draw up and sign a memorandum of understanding.
Generation. Once both parties have settled on the details of the procurement, the actual contract creation and authoring begins. Companies may create multiple drafts, and it’s important to keep these iterations handy for recording and proofing purposes.
Many contracts are a collaborative effort between the stakeholders and their respective legal teams, which adds time to this stage, but it’s best practice to be as thorough as possible.
Approval. At this stage, management must approve the contract and officially set the partnership in motion. Bottlenecks often happen during the contract approval process; prompt management is often needed to keep things moving. Before you sign off on a contract, be sure to consult a legal professional or your team’s legal department.
Execution. Once the contract is approved, it’s time to turn words into action. Store your contract, but keep it on hand to resolve any disputes or questions as they arise.
Auditing. The job isn’t over after the contract is in motion. You should establish an audit trail and regularly review the partnership to make sure contractual obligations are being upheld on both ends. You can save time hunting for stray documents by using a digital contract repository to organize and store key contracts, and make all contract data and metrics easily searchable.
Renewal or termination. If the contract renewal dates aren’t specified, you’ll need to evaluate whether to terminate the agreement or draw up a new contract. Businesses miss out on a bigger bottom line by letting contracts expire. This is one area where a contract management tool can make all the difference, by helping you renew contracts and collect signatures using automation.
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From electronic signatures to reviewing PDFs on the go, a digital contract management solution is the best way to keep your contracts on track.