Manage Your Contracts Wisely: Avoid These Top 3 Pitfalls
Contract management is an essential aspect of any business, ensuring that agreements are upheld and expectations are met. However, several common pitfalls can hinder effective contract management. Below, we explore the top three pitfalls and provide solutions to help you navigate these challenges.
1. Lack of Self-Service
One of the most significant obstacles in contract management is the absence of self-service options. Most contracts follow standard templates. When these models are easily accessible, your team can quickly draft and finalise agreements without unnecessary delays. This streamlined process ensures that your business operations maintain momentum and do not get bogged down by administrative bottlenecks.
Solution: Implement a contract management system that includes a comprehensive library of standard contract templates. This system should be user-friendly and accessible to all relevant team members, enabling them to draft and finalise contracts independently. By utilising our repository of templates, you can ensure that your contracts are both standardised and tailored to your specific needs. Here are some key templates available in our repository:
- NDA (Non-Disclosure Agreement): Protects the confidentiality of the project being negotiated and helps distinguish between curious and invested prospects.
- Services Agreement: Ideal for service providers working with their clients, ensuring clear terms and expectations.
- Teaming Agreement or Partnership Agreements: Facilitates joint collaboration to achieve shared goals.
- Contractor Agreement: Defines the terms of engagement for contractors, ensuring clear expectations and compliance.
- Statement of Work (SOW): Outlines the specific services, deliverables, and timelines for a project, providing clear guidelines for both parties.
- And more.
By integrating these templates into your contract management system, you can streamline the contract creation process, reduce reliance on legal teams for standard agreements, and maintain consistency across all your contracts.
2. Lack of Visibility
While it is not necessary for legal teams to oversee every contract, they must have visibility into all agreements. This oversight is crucial for protecting the business and ensuring compliance with legal standards. Without proper visibility, legal risks increase, and the potential for oversight errors becomes more significant.
Solution: Ensure that all contracts are stored in a centralised, accessible location. Utilise software that offers permission-based access, enabling legal teams to review and monitor contracts without being directly involved in every step. At Cheers, you can find all your contracts in the Cheers Dashboard under the "All Contracts" section. This section allows you to:
- Track contract status: Easily see which contracts are in draft mode, sent, signed, about to expire, and expired or terminated.
- Access contracts anytime: Super simple and at hand whenever you need them, ensuring that you are always up-to-date with your contract management.
- Have actionables from the same platform.
This centralised system ensures that your legal team has the necessary visibility to protect the business while allowing other team members to manage contracts efficiently and independently.
3. Lack of Control
Managing deadlines is critical in contract management. Without control over deadlines, businesses risk protracted negotiations and missed deadlines, which can negatively impact performance and strategic goals. Effective deadline management allows ample time for negotiation, improving contract terms and outcomes.
Solution: Use our contract management software that includes deadline tracking and reminders. This technology will help you stay ahead of critical dates, ensuring that negotiations are timely and performance metrics are met.
The Top Pitfalls of Contract Management According to WCC
Beyond the primary pitfalls, the World Contracting and Commercial Management (WCC) identifies additional challenges that businesses often face:
- Lack of clarity
- Legal not being involved enough
- Failure to engage with stakeholders
- Protracted negotiations
- Negotiations focused on the wrong terms and risks
- Contracts lacking flexibility
- Contracts difficult to understand
- Poor handover by teams
- Limited use of technology
- Poor post-award governance
To overcome these pitfalls, businesses should focus on improving communication, leveraging technology, and fostering collaboration among all stakeholders involved in the contract management process.
Conclusion
Effective contract management is crucial for maintaining business efficiency and mitigating risks. By addressing the common pitfalls of lack of self-service, visibility, and control, you can streamline your contract management process on Cheers CLM. Additionally, being aware of the broader challenges highlighted by the WCC will help you implement comprehensive solutions that enhance your overall contract management strategy.
Investing in a robust contract management system will not only save time and resources but also ensure that your business is well-protected and operates smoothly. Take the necessary steps today to manage your contracts wisely and avoid these common pitfalls.
