Best Practices in Contract Management
Proper contract management is important regardless of your business size. Think of it as a foundation: a chaotic contract management approach may be relatively fine when you deal with just a few clients without huge paperwork overload, but when your business will grow, the number of contracts will grow respectively. When the company will be buried under its own incoherent, messy contracts – it would be too late to think about implementing proper contract management practices, as some of your clients will already leave due to slow document preparation and request processing.
Considering that, it would be wise to implement proper contract management practices to prevent your sales, legal or practically any department from crumbling under contract chaos.
Unification
It is much easier to deal with documentation that is formatted in a similar matter. The employees from different departments will intuitively feel which part of the document should be examined in order to find specific information due to unified company style, even if they’ve never seen such type of document.
At all times it is necessary to check if unified contract style fits legislation of relevant jurisdictions. For example, some companies refrain from giving a number to a contract, but in some jurisdictions having a contract number is mandatory for various banking procedures.
General advice: create a unified corporate style for your documents that would fit the needs of your business and relevant legislation.
Storage
Document storage is a bit of a trick question: it is great to have everything by your hand, and various cloud storages are your best friends at making that possible. However, using this approach comes with a price – your data will be stored on the servers of a third party, unless you will create your own easily accessible infrastructure. There are plenty of tutorials that cover how to create your own storage server, for example, this one.
General advice: if building your own cloud-like storage is not an option – try conducting your own research on the security of third-party services prior to ordering them.
Contract Database
One of the most useful tools for huge workload maintenance is a contract database. Keeping at least just a separate file with short recordings about your contracts (for example, parties, subject, status, payment dates and deadlines) will greatly help with keeping your business at a professional level by preventing missed deadlines and ignored client requests.
General advice: it is a good idea to create & maintain a contract database that would include contract-related information that helps to track tasks and assess performance.
Contract approval algorithm
For some negotiation phase is the most romantic thing in the contract practice, but even if to consider that it is really engaging, it is hard to argue that it might be the most time-consuming part as well. A possible solution to prevent time-wasting is to regulate the negotiation procedure at the beginning of your relations with your client. For example, you draft an agreement, and counterparty reviews it within 2 days, lists questionable parts, and sends you it so you could prepare constructive response prior to scheduled call – no sudden chaotic calls.
General advice: formulate a negotiation procedure algorithm to prevent stagnation and unconstructive calls.
Automation
It is hard to imagine a business that does not have a category of important, yet very similar documents that only require a couple of changes in a template to be used with a new client. Filling them is not hard, but still requires some time for employees that could be spent on more creative tasks, only if there was some magical solution that would fill a template for them. Luckily, we live in the 21st century, and document automation is fairly easy and common nowadays.
Frankly, it is possible to go even further than just simple automated template filling. Modern artificial intelligence solutions can draft you compliant & enforceable agreement from scratch, analyze and alter the already existing agreement. Additionally, contract management software can help with all the best practices, listed above (document unification, contract database maintenance, etc).
General advice: try using automation solutions like Loio (best for legal-oriented documents & contracts) or Power automate (general automation).
Conclusion
Keeping your contracts well-maintained seems like a necessity if you want your business to stay alive. However, it is up to you how to organize that: by hiring an employee that would be responsible for contract management, or by using software solutions. The last option seems more reasonable, as usually such software is less pricey than time billed for contract management by a living human being, and provides an ability to focus on other, less routinely, and more creative tasks.