Commercial contracts are a fact of life for business managers. They form the basis of employment, joint ventures, and other critical relationships. And yet, few businesses have a well-thought-out contract management strategy. And those that do are not always successful in implementing it.
You need a Contract Management System
The most common problem is that businesses don’t have a contract management system. They don’t know exactly where their contracts are, what they contain, and who has the authority to sign them. This means they can’t manage their contracts effectively and have trouble working out where their businesses sit when it comes to legal obligations.
Contract management is a critical component of any business’s risk mitigation strategy. If you don’t know where your contracts are, you can’t know if your business is exposed to risk. And if you don’t know how to manage your contracts, you can’t protect your business.
This is why your business needs a contract management system and the sooner it implements one the better.
What is a contract management system?
A contract management system is three things:
- A place to keep all your contracts and related documents;
- A set of policies and procedures for managing your contracts; and
- A set of tools for helping you manage your contracts.
Let’s take a look at each of these.
A place to keep your contracts and related documents
Your contract management system needs to be a place where you keep all your contracts and related documents. This includes every contract you’ve ever signed, every contract you are currently negotiating, and every contract you’ve signed but haven’t yet implemented.
This is the first step in managing your contracts. You need to know exactly what you are managing. You can’t manage what you don’t know exists.
A set of policies and procedures for managing your contracts
The second component of a contract management system is a set of policies and procedures for managing your contracts.
Those policies should include for example policies on who has authority to sign contracts, on what your business will accept in liability caps and on your business’s position when it comes to indemnities. Procedures should be in place for contract approval and execution.
In our experience, most businesses have no policies or procedures for managing their contracts. Many businesses that have policies and procedures don’t follow them.
If you don’t have policies and procedures for managing your contracts, you don’t have a contract management system.
A set of tools to help you manage your contracts
Not all contract management systems are automated online systems but your contract management system should include tools to help you manage your contracts. These include, for example, tools to help you track conformance, to manage deadlines, and to complete renewals.
Law Quarter offers its clients a fully automated contract management system via the Law Quarter Portal. Our Document Vault is a system that is cost-effective and highly automated. For pricing, get in touch today.
Who to Contact for More Information
Please get in touch if you have any questions on the above.