Contract Management
Managing contracts in a business environment is very important for growing businesses. Companies often make contracts with different parties, including vendors, customers, and other affiliated parties. It’s important to manage contracts to ensure compliance, and to document and agree on changes over time.
What is Contract Management?
Contract management is a broad term that refers to the processes and procedures in place for managing contracts. Commercial contracts, such as purchase orders, sales invoices, and service contracts often have differing terms, so it’s important for both parties to abide by them.
Contract management focuses on the process of contract creation, execution, and analyzing contracts to view performance and identify points of improvement. Effective contract management can help businesses reduce costs over time and mitigate compliance risk.
Why Is Contract Management Important?
Contract management is important for several reasons. Here are a few:
- Reduced compliance risk: Companies can mitigate compliance risk by making sure that they comply with the terms specified in the contract.
- Reduced financial risk: Compliance also mitigates finance risk, as it prevents companies from being fined or penalized by regulatory bodies.
- Reduced contract spend: Companies can save money by implementing an effective contract management strategy. For instance, contracts can be digitized and stored in centralized archives, with access granted only to authorized individuals.
- Reduces low-level work: Employees, especially those that deal regularly with such contracts, including procurement teams, don’t have to worry about regularly reviewing or scrutinizing contracts. This allows them to focus more on high-impact activities that benefit the business.
Common Contract Management Activities
There are different activities that fall under the purview of contract management, such as:
- Negotiating and authorizing contracts
- Managing commitments and relationships with third parties
- Communications
- Setting permissions for contract visibility
- Document management
- Governance and compliance
- Ongoing assessments and reviews of existing contracts
- Change management
- Overseeing renewals or contract termination
- Tracking KPIs and metrics to review performance
Manage Your Contract Spend with SoftCo
SoftCo Contract Compliance is a fantastic solution that integrates tightly SoftCo Procure-to-Pay modules to manage requests, purchase, and control of contract-based spend. It offers a variety of detailed reports on surcharges, exceptions, and contract status.
It also offers a SÄHKE2 certified repository where all agreed contracts can be stored. User permissions can be granted so that only authorized individuals are able to view contracts.