Five Critical Errors In Contract Management
Contract management is a challenging field that requires attention to detail and strong analytical skills in order to identify issues […]
Contract management is a challenging field that requires attention to detail and strong analytical skills in order to identify issues with proposed and existing contractual arrangements.
Even the most experienced and knowledgeable contract management professionals can sometimes make mistakes and allow unfavorable agreement terms or outright errors to slip through the evaluation and review process.
Here are five of the most common mistakes made in the field of contract management.
1. Failing to Manage Risk Properly
Especially with long-established business relationships, it may be tempting to overlook the possibility of default on contractual terms and the damages that could result from that default.
Ensuring that proper compensation for default is included in the terms can serve as an incentive for business partners to live up to their end of the bargain throughout the business deal.
2. Making Assumptions
Personnel should perform all due diligence work to ascertain that invoices are accurate and that the terms are being honored by partners, vendors and other parties.
By taking the steps necessary to verify this information, managers can ensure that any discrepancies are addressed quickly to comply with the terms.
3. Losing Touch
Even when contractual relationships appear to be going smoothly, it is critical to maintain contact with vendors, suppliers and other partners.
This can help to smooth out any ongoing problems and can ensure open lines of communication in the event that a problem should arise.
4. Waiting Until It’s Too Late
Performing an audit after the contract period is over doesn’t seem to make much sense; however, that’s exactly what some companies do to determine the success of their management projects.
If discrepancies or problems are found at this stage, any available recourse is likely to require litigation.
A savvy contract manager, by contrast, will perform spot checks and audits at every stage of the process to prevent default and address problems as they arise.
This can provide a much more proactive approach for management concerns and a solid paper trail in the event that an irreparable default does occur.
5. Resistance to Modern Tools
Even in today’s world of computerized solutions, some managers still depend on paper files and manual ticklers on calendar pages to track the progress of files and maintain compliance.
This can prove disastrous in the modern marketplace, especially for companies that maintain multiple business deals simultaneously and must manage the requirements of each in a timely fashion.
Software programs, like those available from Contract Logix, can provide valuable organization and scheduling tools that can streamline the process considerably.
Incorporating these advanced technological systems into everyday tasks can help employees complete necessary tasks more quickly and effectively.
By watching out for these five critical mistakes, compliance can be improved with contractual obligations in order to spend their time more wisely and tasks more effectively.
Michael highly enjoys writing about technology and the contract management industry.
He has worked as a contract manager for awhile now and received most of his hands on training at contractlogix.com