Contracts specify and govern official, mutual agreements between two or more parties working together. Once the negotiations are finalized, the terms are put into a contract to be signed by the parties involved.
This contract documents and proves the mutual agreement; it’s a legally binding document that can be used in case of contract breaches or defaults. In short, contracts can be considered the most crucial part of a deal. Whether you’re about to sign a contract with a business partner or looking for contractors or freelancers for a certain project, here’s a list of things you should and shouldn’t do when managing your most important contracts.
Do: Make Contract Management a Priority
Contracts are the most important part of finalizing a deal. This makes it really ironic how most people only treat contracts as an after-thought, only ever starting to focus on the piece of document as an extra last-minute task. Creating a contract requires significant focus and insight, it’s something that should be included in the strategy from the beginning of the procurement. Not only does management start long before signing the contract, but it also keeps going throughout the whole period of the contract. It’s going to be the responsibility of the contract manager to plan an effective handover strategy in case any of the key personnel involved in the project leave the project or the organization.
Don’t: Be Ambiguous
Negotiations can get a little messy. They can also be quite short and get finalized easily. However the negotiations go, the process of creating the contract and managing it should be completely separated from the verbal or written negotiations. A contract should be extremely detailed and organized. It should clarify the scope of goals, objectives, tasks, responsibility, timeline, and every other thing entailed in the project. Without clear clauses and terms, or by adding terms you’ve skimmed through in the meeting without writing the exact details in the contract, you’re leaving a lot of room for errors, delays, and blame. In the case of creating a contract with complex terms, consider producing a contract user guide to clarify the terms.
Do: Leverage Technological Tools
As is the case with all paperwork and clerical tasks, contract management can be tedious and time-consuming. Sometimes, dealing with too many documents is just plain boring; some would even say it’s a waste of time and resources. That’s why the team of contract management pros at www.contracthound.com recommends automating these tasks. There are some great tools out there that will send reminders about important dates, streamline the contract writing process, and help you manage your contracts effectively. So, be sure to use the technological tools at your disposal to make contract management more efficient and optimized.
Do: Specify Workflow and Timeline
During the procurement process, you’ll need to design and specify the key information that will be exchanged between you and your provider after the contract is signed. There are many instances where the exact timeline and workflow of a project aren’t clear, especially at the beginning of the negotiations. However, that’s exactly why this is the period in which you need to address this ambiguity and clarify all the information you’ll need to be able to effectively manage the contract.
Don’t: Forget to Review the Contract
Everyone knows that reviewing a contract is crucial. However, it’s easy to miss a few wrong terms when you’re skimming over the contract right after writing it. You’ll need to take a step back, remind yourself of the bigger picture once more, and then check every clause. It’s also a good idea to get a fresh eye to look over the contract, which can help point out the errors or the risks that come with certain clauses and terms.
Do: Be Flexible when Managing Your Contracts
Although contracts are made to govern the deal, they’re not set in stone. Sometimes, life does happen, and the contract can’t be fulfilled for reasons you can’t control. Instead of waiting until something goes wrong, efficient contract management should foresee possible risks and threats and manage the performance of the contract in a flexible way.
The more vital the project, the more important the contract. Problems usually arise when the contract is treated as an after-thought instead of the core of the project. To ensure the success of your partnership, utilize sound, effective, and efficient contract management strategies to streamline your processes and avoid many obstacles. Not only will this help you build professional partnerships, but it will also help you protect your business interests.