Compliance is the most obvious and immediate challenge for contract management. Failure to comply with the obligations set out in a contract can disrupt your relationships with customers and lead to financial losses. Taking the time to determine where these issues are occurring in your teams can help you reduce similar issues or bottlenecks in the future. How do you ensure that a contract is respected? Are there steps to detect and remedy violations, especially in their subtle forms? Do you know what`s in your contracts and whether everyone is keeping their share of the deal? Does each party concerned comply with and adhere to what has been agreed? Uncontrolled, these blind spots become deeply problematic for your business. For employees in leadership or leadership roles, it is often difficult to monitor contracts after they are signed, so the contract management phase of the contract lifecycle is passed on to employees at the operational level who may not have the knowledge or authority to oversee a contract. Poor contract management can lead to, among other things, missed renewals, contract breaches and scope shifts. It`s easy to let the contract management component of your sales process go under the radar uncontrollably, but with all the time, effort, and resources your business invests in empowering your sales team to effectively manage, execute, and manage contracts, it`s worth making sure existing processes run as efficiently as possible. When done right, the work that follows the execution of a contract establishes long-term business relationships that are critical to the ultimate success of your business. Contract compliance audits can also be proactive. For example, an audit that you do regularly, say, annually and for a general purpose is proactive and acts primarily as a preventive measure – addressing potential problems before they become problems. Think of proactive contract compliance audits as regular checks on the status of your business agreements. Regular audits of your contract management process can help you identify issues that quickly lead to bigger issues at all levels, such as lost files, hours lost, longer contract lifecycles, and legal risks.
But it`s important to know what to look for. While the contract lifecycle ultimately varies from company to company, here are some universal questions that can help you examine each phase of the contract lifecycle: There is always room for improvement in contract management. Audits can provide data-driven guidance for updating processes and internal controls. Use the results of each audit to improve your internal processes. If the audit finds no problems, congratulations! If this is the case, it is your responsibility to resolve them and find a way to avoid future problems. Contract compliance audits also enable organizations to learn, evolve, and evolve better. Their results highlight internal blind spots and offer the opportunity to improve internal processes. Over time, as this information is integrated into your organization, audits reveal fewer issues related to organizational non-compliance and capture non-compliance before permanent damage occurs. Ensuring that you are aware of contracts that no longer serve the best interests of your business is essential to improving your overall profitability and efficiency. Instead of blindly renewing or waiting until the last minute to make changes, make sure you have a system in place to evaluate your contracts so you can start the renegotiation process early enough to get a better deal for your business or cancel on good terms.
Externally, good communication can decide or destroy your business relationships. To get the first one, notify each party that will be affected by the audit. Instead of blaming or arousing suspicion, focus on working together and strengthening the relationship between you and the other party. Reviewing and negotiating contracts can take months or even years, and are often considered the most expensive part of the contract lifecycle (at least when it comes to employees` hours of work). However, there are steps that companies can take to eliminate some of the manual labor and ultimately shorten the time it takes to negotiate and agree to the terms. Staying organized and having a clear process that communication comes and goes is crucial. Regular review of your contract lifecycle is the best way to optimize your team`s capacity in terms of contract volume. The more flawless contracts your team can handle, the faster your business can grow. Contract management software can help you eliminate many time-consuming and error-prone processes in your lifecycle.
If you want to further automate your contract management process, check out ContractSafe today. Once you`ve collected data on the previous seven levels of this audit, you`ll have the tools you need to streamline your contract management process to deliver greater value to customers and reduce overall costs and risk outcomes. For example, during this process, you noticed that you renewed a contract that your organization no longer needs, or that your team repeatedly creates the same contract from scratch. Now that you are aware of these issues, you can use the collected data to implement a continuous feedback loop between the different departments involved in the contract management lifecycle and your management team. Contract compliance audits increase transparency and trust between companies. Conducting collaborative audits and working with other companies to solve problems – large or small – can build trust with partners and build long-term relationships. If the life cycle of your contract requires work and your average time to execute an agreement is more than 25 days, it may be a good idea to conduct quarterly contract management audits. By reviewing the process frequently and repeatedly, you can identify inefficiencies and monitor the results of corrective actions. Be sure to set clear metrics on what success looks like (e.g.B. average time to execute an agreement, percentage of key missed deadlines, etc.). Once you`ve reached your goals, you can schedule your audits every year. If you had to focus on one thing to keep your audit productive and useful (and not a dumpster fire), it would be communication.
For any contractual compliance audit, communication is not an easy task. The best way to solve the problem is to perform contract compliance audits. Whether it`s a folder on a shared drive or contract lifecycle management (CLM) software, your contracts need to be securely hosted in a central location where the necessary personnel who need to ensure conditions are met from all sides are easily accessible. When employees join or leave your team and responsibilities change, permissions and access to files can easily be overlooked, so employees don`t have the tools they need to effectively execute and manage contracts. When the right people have access to the right contracts, your business can better identify potential risks and lost revenue. Make sure you have a process in place to review permissions for your contracts on a quarterly basis so that the right employees have access to the information they need while protecting sensitive data. Inaccurate billing is rarely intentional. Instead, small mistakes can add up. An audit could provide in-depth information about confirming invoice amounts and determining if you have overpaid. While security doesn`t directly improve operational efficiency, it`s essential to protect your confidential contracts from cybersecurity threats. Whether your industry regulates data security or you just want to get a good night`s sleep, revising security standards is an important part of any contract management audit. .