Four contract management FAQs
Contract management is an essential part of any successful business; however, it is frequently overlooked or misunderstood.
What is contract management?
Rather than simply signing an agreement and filing it away, successful contract management involves managing the full contractual agreement, including the creation, execution and ongoing analysis, to ensure performance is optimised and financial risk minimised.
It is not enough to have professionals handling contract management without efficient contract management software in place to assist with compliance and analytical needs. A poorly-phrased or managed contract can cost a company millions if breaches are not swiftly identified and resolved.
Although clearly an essential part of business functioning, it is remarkable how few companies fully understand contract management or the benefits that utilising a management system such as Contractwise can offer.
What is CLM?
Contract lifecycle management (CLM) refers to the lifecycle of a contract: draft, utilisation, expiry. Although this sounds simple, a company with multiple contracts at different stages may experience difficulties when it comes to managing everything at once.
CLM mitigates this struggle by drafting a contract in minutes or hours and allowing fast analysation of contracts to establish obligations, rights and risks for each party.
In simple terms, CLM enables contract development to continue during the life of the contract by ensuring everyone agrees on the definitions, descriptions, documents and data used in the contract.
Why use contract management software?
Utilising an efficient contract management system enables development and analysation to be streamlined, ensuring businesses are run as efficiently as possible.
The software stores and manages contracts and supporting documents to keep everything in the same place. Good management systems will also provide details regarding the development of contracts and will assist in mitigating risk.
If I have a contract management system, do I need a legal department?
While an efficient contract management system will facilitate more self-service options when it comes to the running of your business and contractual agreements, this process cannot function without a legal team to draft individual clauses and ensure the contract as a whole is compliant with laws and regulations, such as UCTA.
You will also require the insight of a legal team to discuss how to deal with any breaches your system might pick up and to ensure communication is undertaken between parties.