5 Contract Management Best Practices

Contract Data moving through a Blockchain - abstract image, made using AI (Midjourney)

Contract Management Best Practices

Contract management is a multifaceted, complex process involving many stakeholders in your organisation. You may have a Procurement Team with embedded Contract Managers or a separate Legal and Contracts team. Regardless, any Procurement Professional must understand Contract Management. 

Contract management best practices help you optimise your overall Procurement process by streamlining your organisation's contracting processes and procedures. Making it easier to manage your Supplier Contracts lifecycle to extract total value out of these relationships and contracts. 

Of course, we consider Contract Management from the Procurement lens. So these Contract Management Best Practices will apply only to Supplier Contracts and Relationships. 

The following five contract management best practices will help you overhaul your Supplier Contract Management Process. 

1- Centralised Contract Data for all

Contract Data is one of the most valuable pieces of information we receive throughout the supplier contracting process. The Contract should be treated like an asset to your business. 

This means you need a Contract Repository, an essential part of any Contract Lifecycle Management Platform. The Contract will have its own record, and most importantly, this Contract Record will need to be linked to a Supplier Record. If it doesn't, your Contract Lifecycle Management Platform isn't truly geared up for Procurement Teams and is likely more sales focussed. 

Contract Data moving through a Blockchain - abstract image, made using AI (Midjourney)

2 - Automate Contract Approval Processes

The days of manually tracking, managing and approving contracts are long gone. Automated contract management software can manage all aspects of the contract lifecycle, including contract drafting, approval/signing and archiving.

By automating this process, you will save time and money while also improving compliance with regulatory requirements.

A caveat here - this is mainly aspirational at present. Almost every Contract Lifecycle Management product makes bold claims like the above. Almost none deliver in full.

Instead, consider how the Contract Management Platform digitises your processes. With that digitisation, what efficiencies are created in the end-to-end process? 

3 - Standardise and Streamline Contract Templates

Regarding contracts, standardisation is the key to streamlining your process. A standardised contract template will help ensure that all your contracts are uniform and consistent. This makes reviewing them easier for both parties and reduces the risk of mistakes.

Furthermore, it allows you and your team to focus on more important matters than formatting whenever you need a new contract. 

Each time you change a contract template (perhaps adding or removing clauses), all other contracts using that same template will be updated automatically.

Ensuring your Contract Management Platform houses your templates and makes it easy to issue them is crucial here.

4 - Use Contract Analytics to Measure Performance and Identify Opportunities

Contract analytics can help you measure your current performance and identify opportunities.

Here are some specific data insights I like to pull from my Supplier Contracting Process:

1. Time to review Contracts

2. Time to Negotiate

3. How Long do Approvals take

4. eSignature - how long until this is completed

5. Total time to signature

You can break this down further and look at your Supplier Segmentation, Categories and Contract types. 

5 - Optimise Renewals and Expirations

The Contract Renewals processes need to be red hot. Too often, you'll have leakage here where Contracts are auto-renewing without you realising. In addition, you'll not have a Contract Renewal Strategy or Process in place. This means you're leaving money on the table for these Contract Renewals, which you could be negotiating.

One of the best processes I implemented was a digitised Contract Renewal Process in Gatekeeper. This process completely freed up my Supplier Management Team from needing to chase renewals internally. 

It was a true GAME CHANGER.

Digital Contract Management is a Game Changer

Following these best practices will help you streamline contract management and capture all contractual obligations and commitments. The tips mentioned above should help you streamline contract management and ensure that all contractual obligations and responsibilities are captured. These practices will also make it easier to manage contracts throughout their lifecycle, from initial negotiation through renewal or expiration.

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