Key contract management best practices
Effective contract management best practices rely on understanding the entire lifecycle of a contract. From creation to renewal, let’s dive into the strategies that guarantee successful contract management processes.
1. Efficient contract creation: Eliminate errors and save time
The contract creation phase often presents bottlenecks. A primary best practice in contract management is to streamline the drafting process by using an automated contract creation solution. Using a dedicated contract drafting and editing software allows you to implement:
- Automated contract templates: Automate repetitive clauses and structure with standardized templates, reducing errors and saving time.
- Questionnaire-based solutions: Use guided questionnaires where team members input key details (e.g., counterparty name, governing law). The software generates compliant contracts quickly, minimizing manual intervention and allowing non-legal staff to create legally sound contracts.
2. Seamless approval and execution: Minimize delays
The approval and execution phases often experience delays due to unclear workflows. To follow contract lifecycle management best practices in these stages, organizations should:
- Define clear roles: Identify specific approvers for each contract type to reduce confusion.
- Automated approval routing: Route contracts directly to relevant stakeholders for review, and use notification tools to keep everyone updated.
To streamline execution, modern contract management software includes e-signature options, reducing the signing time from days to mere minutes.
3. Organized storage and compliance: Centralized access to contracts
A core principle of contract management best practices is centralized storage. Scattered or poorly stored contracts lead to inefficiencies and compliance risks. Instead, adopt a system with:
- Centralized contract repository: A secure, searchable database to quickly locate contracts by keyword or metadata.
- Permission-based access: Control which team members can access or edit each contract.
Explore how a smart contract archiving system can ensure organized, compliant contract storage.
4. Proactive monitoring: Never miss a renewal
Staying on top of important dates is crucial for reducing costs and avoiding missed renewals. When it comes to monitoring, follow these best practices in contract management:
- Establish routines for managing deadlines: Keep track of key dates such as upcoming renewals, renegotiations, or terminations to avoid costly oversights. Use a digital solution to set up automatic alerts and reminders.
- Track “evergreen” contracts: Regularly review auto-renewing contracts to determine if they still serve the business’s interests.
Integrated monitoring tools, like those in a digital contract management solution, help you keep an eye on all critical deadlines.
Summary of best practices in contract management
In summary, here are the key takeaways for effective contract lifecycle management:
- Standardized contract creation – Use pre-approved templates and standardized questionnaires to streamline and simplify the drafting process.
- Clear approval workflows – Define roles and establish structured approval pathways to ensure efficient approvals and streamlined signature processes.
- Centralized storage – Keep contracts secure and easily accessible within a centralized, searchable archive.
- Active monitoring – Set up reminders for contract milestones to manage renewals and avoid unwanted auto-renewals.
