A Starter Manual to Contract Tracking

Contract management is an ever-evolving process, where strategy is required throughout each phase of the contract lifecycle — from the very beginning at contract intake, to the very end at expiry or renewal. Oftentimes after a contract is signed and fully executed, the contract and associated documents are stored and forgotten about, only to be searched for once an issue arises or the contract expires. For contract management success, it’s imperative that contract managers and administrators prioritize ongoing management of each agreement to ensure that deliverables and terms are followed through on. With an appropriate contract tracking method, you can do just that.

Subpar contract management software can impede your ability to capture new contract opportunities and deals. Rather than settle for a system that increases inefficiencies and bottlenecks, you can adopt a risk-preventative, compliance-minded, and collaboration-friendly solution capable of propelling contract management success.

Today, we’ll discuss all things contract tracking and monitoring. We’ll give an overview of how contract repositories can support you in these activities, as well as discuss which contract data to leverage to for reviews of KPI achievements and to maximize your tracking procedures.

Best Practices for Contract Tracking and Monitoring

1. Use a Centralized Contract Repository

With a digital, centralized repository, you can easily build contract draft from preapproved contract templates and clauses. This results in the rapid creation of accurate, compliant contracts. Leveraging a digital repository that centralizes all of your contracts offers an organized, single source of truth to your team regarding where contracts are located. In your repository, your team can use advanced text-based searches and customizable filters to easily retrieve commonly used contract types. This can help reduce delays in finding the right contracts at the times you need them most, such as during negotiations and reviews.

Traditional contract storage by way of physical copies in filing cabinets, shared drives, email chains, and desktops are prone to risk, data leakage, and missing contracts. A centralized digital repository supports you with cloud secure storage and instant access to your contracts at all times. Within your repository, you select exact metadata points to track for a given contract or group of contracts. For example, obligations, compliance requirements, renewal dates, negotiation dates, deliverables, termination conditions, performance indicators (KPIs), risky clauses, or other critical and time-sensitive information are common data points that you can efficiently track in your software solution.

Companies that automate their contract storage with a digital contract repository experience gains in workplace efficiency and contract risk mitigation, most especially for organizations that consistently work with a high volume of complex contracts.

2. Refine Your Contract Tracking Method

Productive contract lifecycle management largely hinges on the efficiency of contract task management. Contract mangers should strategize which contract metadata to prioritize in their contract tracking procedures. For example, they may elect to summarize key data points including contract term start and end dares, renewal dates, expiry dates, contract value, obligations, payment deadlines, and more. In this manner, you increase visibility over your agreements to cultivate a proactive culture surrounding your contracts.

A successful contract manager is a proactive contract manager. We highly recommending configuring automated contract reminders to be sent off to relevant stakeholders and employees to keep tabs on upcoming key dates and time-sensitive contract management tasks and responsibilities. Do you often forget about auto renewing contracts or expiring contracts? Then automated reminders can seriously help. To stay proactive, routinely review your contracts and audit your contract management practices. Contract reviews will help you mitigate risks and implement corrective, preventative action before potential risk manifest into major problems. Experts in contract management commonly note that organizations should work a month ahead of time on contracts due for expiration. In this manner, you have a sufficient amount of time to adequately prepare for renegotiation or termination, meaning you can get the most advantageous deal for your company.

3. Communicate with Stakeholders

Contracts always involve two or more parties with a financial stake in the agreement. Contract managers are obligated to stay in communication with stakeholders to ensure expectations regarding the contract are understood and that any queries and clarifications are swiftly addressed.

Here’s a list of a couple of things to communicate to your stakeholders:

• Contract deadlines
• Renewal dates
• Payment due dates
• Deliverables
• Obligations
• KPIs (Key Performance Indicators)

In terms of contract performance, you should speak with your stakeholders about the expectations of each contract and how they are expected to perform. When a contract is not meeting performance markers, you can collaboratively review your contracts and make necessary changes. In addition, you’ll benefit from documenting a detailed timeline of the changes made to each contract (this can also be found via audit trails.)

4. Schedule Ongoing Contract Reviews

The contract lifecycle doesn’t end at signing. With consistent contract reviews, you can pinpoint noncompliance and take immediate action to correct the course of your agreements. This might look like the addition, omission, or editing of a risky clause. Reviews also increase organizational awareness of deadlines like auto renewals and expirations.

What is Contract Tracking?

Contract tracking refers to the identification of where within the contract lifecycle a contract is located. Understanding which phase a contract is in within its lifecycle can help you decide which next steps to take on the contract at hand. In this manner, you can appropriately relay contract information to your teams and communicate what actions need to be taken next on a contract or group of contracts.

Effective contract lifecycle management requires intentional supervision of each agreement pre- and post-signature to ensure that risks are appropriately managed. Subpar risk management can result in reputational damages and other expensive repercussions.

For companies that work with high contract volumes, contract tracking can prove to be a complicated task. However, digital contract software can support your teams with effective contract tracking capabilities to enhance contract risk prevention, increase security, and organize key dates.

To successfully maintain a demanding contract portfolio, contract tracking is an absolute must for visibility into contract lifecycles.

For effective contract tracking, it’s important to know the stages of the contract lifecycle. Let’s discuss contract lifecycle management and explore a brief overview of each stage of the contract lifecycle.

Contract Lifecycle Management Defined

Contract lifecycle management is the process of overseeing contracts as they move throughout each phase of the lifecycle, ensuring that obligations are met and compliance is maintained.

The 9 Stages of the Contract Lifecycle

The contract lifecycle includes the following stages:

In this stage, a party submits a contract request via custom contract intake form, initiating the contract lifecycle. Client information provided in the intake forms is then auto populated into a preapproved contract template, allowing for a rapid contract authoring stage. According to the information provided by clients in the intake form, an audit trail is developed and data is securely stored within the contract repository.

Contract authoring is streamlined with a library of preapproved contract templates and clauses. While drafting your contracts, you’ll want to confirm that each document includes appropriate and accurate counterparty information, standard clauses, milestones, deliverables, obligations, and key dates (i.e., auto renewal dates, payment deadlines, contract expiry dates.) Contract drafts are stored within your centralized contract repository, equipped with version control to ensure that your teams only work on the correct contract drafts. Clause merging, automation, and metadata auto population are some star capabilities that assist with contract authoring efficiency and productivity.

Contract approval refers to the phase where a contract draft is submitted to approvers for review. Following submission for review, the document is analyzed and approved. Digital contract software allows users to configure custom, automated workflows to streamline and standardize task management, approvals, and reviews. You increase efficiency by ensuring that your drafts are sent off for approval to the right stakeholders at the right times.

Contract execution refers to the signing and finalization of a contract. Once contractual parties sign the agreement, the contract is activated, binding the parties by its terms. We recommend leveraging electronic signature integrations for rapid, secure signing, where parties can sign at their convenience within seconds on their mobile device.

Contract storage is essential to productive, secure contract management. The efficiency of retrieving contracts and clauses when you need them will directly influence the speed of your contract lifecycles. A SharePoint-based repository will provide you with maximum ease and security for storing and managing your current and past contracts. A digital repository offers advanced text-based search capabilities as well as customizable filters for repeated use, allowing you to locate commonly used contract and clause types on a regular basis. In a digital repository, you increase the security of your contract data with permissions and role-based access controls in a cloud environment. Traditional contract management storage in filing cabinets, shared drives, emails, and desktops are all prone to human error, contract misplacement, and risk.

During records management, contract managers and involved stakeholders place emphasis on continued management to ensure compliance and to confirm that terms are followed. With SharePoint Backup and SharePoint Restore, you’ll gain confidence that your contracts are kept exactly where you left them.

Search and retrieval are paramount to time-efficiency in contract lifecycle management. Without an easy way to locate and retrieve your documents, you’ll waste tons of time. As previously mentioned, custom filters and advanced text-based searches support the rapid retrieval of documents and clauses.

Reporting and data analysis is essential to increasing organizational awareness of KPI achievements, strengths and weakness in contract procedures, and in attaining on demand insights on the status and performance of your contract lifecycles. From your contract metadata provided by intuitive contract dashboards, you can generate and share custom reports with stakeholders and upper-level management. With these reports, your teams can analyze data and KPI progression to support data-driven decisions, prevent risks, and optimize your current procedures. Now, you can learn instantly where a contract is located within its lifecycle with your dashboards. Some data that contract management teams commonly review include the following:

• Sales metrics
• Renewal numbers
• Savings
• Length of contract lifecycles
• Contract value

Contract renewal is the final stage of contract lifecycle management. With automated reminders, you can create a proactive culture around your company’s contracts and prepare ahead to get the best deals. As a contract approaches its renewal date, you will especially need to remind your team of agreements configured for auto renewal. This means if there is a contract with unfavorable terms that you do not wish to renew, you’ll need to cancel the contract in time. If you forget to cancel an unwanted auto renewal, then you have to stick with the contract for yet another term. To prepare effectively for the end of a contract term and to ensure that contractual obligations with your clients and vendors are legally protected, automated reminders can seriously help.

Contract Tracking, The Key to Boosting Visibility.

Without contract visibility, you lose track of where within the lifecycle a contract is located. You might also lose your contracts all together! Visibility in contract management is key to creating clear communication surrounding your contracts. In this way, contract managers can learn exactly where a contract is sitting within pre-renewal or within other phases by having real-time contract data readily accessible.

Pain Points of Poor Contract Tracking

Subpar contract tracking results in the following:

• Confusion regarding where contracts are located
• Inadequate communication
• Tension between internal teams
• Increased risks
• Contract loss and misplacement

Business Advantages of Contract Tracking

Effective contract tracking capabilities results in the following business advantages:

• Increased transparency of contract activities
• Organizational awareness of key dates and contract statuses
• Enhanced collaboration
• Improved task management
• Faster contract approvals

While manual contract management might be able to cut it for smaller companies or companies with miniscule contract portfolios, a manual system is ill-equipped for tracking all the complex details and dates found within a larger contract portfolio. Selecting contract management software with built-in contract tracking capabilities (proactive dashboards, customized reporting, automated reminders, etc.) will optimize your contract management strategies with cloud security, contract intelligence, and automation.

Key Contract Tracking Tools

Contract management software offers premiere tools to support contract tracking. With the following tools, you’ll boost visibility and have contract metadata, performance, and statuses readily available for your teams to glean insights on.

Look for the following features when selecting a contract management solution:

Conclusion

With best-in-class contract management software inclusive of contract tracking capabilities, you can streamline optimize contract transparency, internal communication, and contract results. Thanks to contract tracking, you can improve risk mitigation while saving time and cutting costs.

Now, you can make the status and performance of your contracts readily available, on demand for your stakeholders, providing them with contract data in real time. Wondering where an employment contract is located within its lifecycle? Find the answer in just seconds. For the best results in contract lifecycle management, adopt a solution built to track any agreement or clause, and you’ll gain more secure, risk-mitigative contract lifecycle management.

Learn more about our Dock 365 Contract Management System here.

Learn more about Contract Lifecyle Management (CLM) Software here.

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Originally published at https://blog.mydock365.com.