Contracts are the lifeblood of any business. They govern all relationships, from agreements with suppliers and vendors to terms of employment with employees and independent contractors. If businesses lack a contract system, then they put themselves at legal risk. However, it is increasingly common for companies to fail to recognize the rises that are involved in contracts, particularly when it comes to key legal provisions. Unfortunately, the consequences of this are wide-ranging, and can cause you to lose out on a lot of money and negotiation time if a contract goes sideways. With that in mind, here is what you need to do to avoid mismanaging your contracts.
Not MakingSure That Contract Alterations are Legally Reviewed
Every contract needs to be poured over by legal experts. This is to make sure that it is in line with compliance regulations and local laws regarding the terms of the contracts. However, many companies let salespeople and other inexperienced personnel alter the terms of a contracts without legal oversight. This is a huge mistake that can cost you a lot of money if it voids the contracts. This can happen if someone accidently removes or alters a key legal provision in the contracts, and it can make your organization bound to the terms and conditions of a non-beneficial contract.
This is particularly an issue with salespeople, who need to hit sales targets and might do anything in their power to close a deal without regards for long-term implications. As such, you will need to make sure that your contracts are reviewed by your legal department before they are finalized in order to ensure that they measure up to legal and compliance standards.
Not using a Contract Management System
Contract management systems are an extremely important part of properly managing a contract. Used in conjunction with contract lifecycle management, this system can make sure that you manage and monitor a contract for its entire duration. Using contract lifecycle management, you can store the contract within a contract management system and review it at every step of the way, including when it hits certain KPIs or during the negotiation and renegotiation phase.
Sadly, many businesses are reluctant to invest into contract management systems due to the perceived cost. However, the cost of not doing so can often be higher, as a mismanaged contract can cause extreme inefficiencies and a big waste of time, effort, and money.
Managing your contracts in an efficient and straightforward way in an essential part of running a business. Without a good contract lifecycle management process, and without a strong legal review team to review contracts at every step of the way, you will likely run into issues with your contracts. If this is the case, then you will have to spend countless hours resolving issues, as well as possible legal repercussions. Instead, it is better to get your contract management process right in the first place by investing in it upfront and making sure that you have the proper software and personnel to handle any contract issues.