Eight Contract Management Best Practices to Drive Growth

Contract management is no longer just about dealing with paperwork—it has become a crucial business strategy that can greatly contribute to your company's growth.

When you apply best practices for efficient contract management, you're not just safeguarding your interests and looking out for yourself. You're also unlocking new ways to streamline operations, build stronger relationships with better negotiations, and reach new heights of success!

This comprehensive guide will equip you with the knowledge you need to elevate your contract management game in 2024. It discusses the essential best practices, explores their benefits for driving business growth, and highlights how DocJuris's innovative features can empower you to achieve those benefits.

Main takeaways from this article:

• Effective contract management reduces risks, enhances compliance, and drives operational efficiency and business growth with smooth contract negotiations.
• Clear approval workflows and centralized repositories improve transparency and accessibility in contract management.
• Monitoring contract management KPIs and facilitating collaboration foster better decision-making and stronger business relationships.
• Regularly reviewing and updating contracts keeps agreements relevant and aligned with current business needs and regulatory requirements.
• Utilizing contract lifecycle management software like DocJuris and standardizing contract templates streamline processes and ensure consistency.

What is contract management?

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Contract management is the process of managing the entire lifecycle of a contract, from creation and negotiation to execution, performance monitoring, and eventual renewal or termination. It includes everything contract managers do for managing contracts and ensuring that they are effective and compliant, minimizing risk, and delivering on their intended economic value. 

Benefits of effective contract management

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Effective contract management is one of the pillars of a well-run organization. By implementing robust contract management practices, businesses can unlock a myriad of benefits that directly impact their bottom line and overall success. 

These benefits include:

Reduced risk

Poorly managed contracts can expose your business to significant risks, including financial loss, legal disputes, and reputational damage. Effective contract management helps mitigate these risks by:

1. Identifying potential issues early: Regular contract reviews and analysis can uncover hidden risks and allow stakeholders to engage in timely discussions on risk management.
2. Ensuring compliance: Staying up-to-date with legal and regulatory requirements protects your business from penalties.
3. Protecting intellectual property: Clear contract terms safeguard your valuable assets.

Increased operational efficiency

Manual contract processes are time-consuming and prone to errors. By automating and streamlining contract workflows, you can:

1. Improve turnaround times: With faster contract execution, you can look forward to quicker revenue generation.
2. Reduce costs: Automation eliminates manual tasks and reduces the need for additional resources, cutting unnecessary expenses and leading to significant cost savings.
3. Enhance collaboration: Centralized contract repositories make it easier for teams to work together smoothly.

Enhanced compliance

Non-compliance with contract terms can lead to severe consequences. Effective contract management helps to:

1. Prevent breaches: Clear contract language and regular monitoring reduce the risk of non-compliance.
2. Manage audits: Having well-organized contract documentation simplifies the audit process. 
3. Build trust: Demonstrating that you follow rules and regulations helps to improve your reputation and improves how others view your organization.

Better decision-making

Data-driven insights are essential for making informed business decisions. Contract management provides valuable data that can help you:

1. Optimize contract terms: You can monitor how well the contract is being carried out and find ways to improve. 
2. Identify cost-saving opportunities: You can uncover opportunities to renegotiate or consolidate contracts.
3. Allocate resources effectively: Understand contract commitments to optimize resource allocation.

Stronger business relationships

Strong relationships with partners and clients are crucial for long-term success. Effective contract management fosters trust and collaboration by:

1. Improving communication: Clear contract terms and timely responses help build confidence with all stakeholders.
2. Enhancing performance: Meeting contractual obligations goes a long way toward strengthening business relationships.
3. Facilitating dispute resolution: Well-defined contract terms help minimize misunderstandings and conflicts of interest.

In essence, by investing in effective contract management, businesses can reap the rewards of reduced risk, increased efficiency, enhanced compliance, better decision-making, and stronger relationships.

Eight best practices for successful contract management

Effective contract management is a strategic imperative for businesses of all sizes. By following these best practices, you can optimize your contract lifecycle, reduce risks, and drive growth.

1. Utilize contract lifecycle management software

Don't underestimate the power of dedicated Contract Lifecycle Management (CLM) software! Tools like DocJuris help keep your contract management practices on track. Ditch the spreadsheets and embrace a centralized platform for managing all your contracts. 

DocJuris offers a suite of features designed to streamline every stage of the contract lifecycle, including:

• Automated workflows: Eliminate manual processes like sending reminders and tracking deadlines, ensuring timely execution and avoiding missed opportunities.
• Secure cloud storage: Access vital contract data securely from anywhere, anytime, improving collaboration and accessibility.
• Version control: Track changes meticulously and ensure you're working on the latest version of any contract, reducing errors and confusion.

2. Standardize contract templates

Develop a library of standardized templates for commonly used agreements like NDAs, service agreements, and purchase orders. By standardizing contract templates, you bring consistency and clarity to your contract management process. 

This practice significantly reduces the time spent drafting and reviewing and redlining contracts, as you’ll use pre-approved language and standardized structures tailored to your business needs. Standardized templates help minimize misunderstandings and potential legal complications, as the uniform language cuts down on ambiguity. 

By combining standardized templates with dynamic tools like DocJuris's AI-powered playbooks, you automate routine tasks like the contract creation process, contracts review, and compliance monitoring, driving efficiency and growth within your organization. Ultimately, standardized contract templates create a smoother, more efficient workflow that can improve your company’s operational efficiency.

3. Implement clear approval workflows

Establishing clear approval workflows is essential in contract management. By pre-defining workflows, you ensure contracts move seamlessly through necessary reviews and approvals. 

It’s crucial to set up automated workflows to mitigate errors and delays. Define the roles and responsibilities within your team to ensure everyone knows their part in the process. This not only helps maintain accountability but also speeds up the contract lifecycle. 

Use tools that offer user permissions to control who can access and approve specific documents, maintaining security and compliance. Centralizing this workflow ensures that all stakeholders are informed and that approval processes are consistent, ultimately driving operational efficiency and minimizing risks.

4. Maintain a centralized contract repository

A centralized contract repository is a critical component of effective contract management. By consolidating all contracts in a single location, you enhance visibility and accessibility, making it easier for your team to track and manage agreements. 

This centralization improves searchability and categorization, enabling quicker document retrieval. It also acts as a single source of truth, ensuring that everyone operates from the most current information. 

Another critical advantage is enhanced security, as access to sensitive information can be limited and monitored. Tools like DocJuris can assist in setting up a robust repository, offering features like data encryption and compliance with privacy laws (e.g., GDPR, CCPA). A centralized contract repository streamlines workflows and supports compliance, driving overall operational efficiency.

5. Monitor key performance indicators (KPIs)

Tracking KPIs is essential for gauging the success of your contract management strategies. KPIs offer measurable benchmarks that provide insights into efficiency, compliance, and the overall health of your contract portfolio.

Metrics like contract cycle time, renewal rates, and compliance tracking help to uncover bottlenecks and areas for improvement. Implementing tools such as dashboards and automated alerts can help in real-time monitoring and ensure you stay on top of critical contract milestones. 

Analyzing these performance indicators enables a proactive approach, allowing businesses to address potential issues before they escalate, and driving better decision-making and operational excellence.

6. Ensure compliance

Ensuring compliance is crucial for maintaining the integrity of contracts and the trust of stakeholders. The process begins with understanding the legal and regulatory landscape relevant to the industry. Leveraging a robust contract management system can automate compliance checks, reducing manual errors and ensuring accuracy. 

DocJuris's features, such as automated reminders and obligation tracking, help ensure that all contractual terms and conditions are met promptly. Establishing clear approval workflows and user permissions further helps maintain compliance by ensuring that the right individuals review and authorize contracts. Regular audits and reviews of contracts can also identify any potential compliance issues before they escalate. 

By making compliance a priority, you're not just protecting your organization from legal repercussions, but also fostering a reliable and ethical business environment, which can drive growth and strengthen business relationships.

7. Facilitate collaboration

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Effective contract management thrives on robust collaboration. By establishing open lines of communication and ensuring all relevant stakeholders are actively engaged, you set the stage for seamless contract execution. 

Integrating collaborative tools and platforms facilitates real-time interactions and updates, streamlining processes significantly. Encourage cross-departmental participation,  like involving sales, procurement, and legal teams, to ensure that every contract aligns well with organizational goals. Establish clear roles and responsibilities, creating accountability and enhancing efficiency. 

Utilizing tools like negotiation heatmaps and AI-powered playbooks from DocJuris ensures that all team members are on the same page, leading to more informed, swift decision-making. With collaborative features and audit trails, you can nip potential issues in the bud before they escalate. Ultimately, a collaborative approach not only simplifies and smooths the contract management process, but also fosters innovation and strengthens business relationships.

8. Regularly review and update contracts

Contracts are dynamic documents that should evolve alongside your business’ needs and regulatory changes. Regularly reviewing and updating your contracts ensures that they remain relevant and enforceable. This process involves assessing current contract performance, identifying areas for improvement, and incorporating new clauses to mitigate emerging risks or leverage new opportunities. 

By staying proactive, you can safeguard your organization against potential legal pitfalls and enhance operational efficiency. Effective contract management platforms like DocJuris can facilitate this process with features like automated reminders for contract renewals, built-in compliance checks, and comprehensive version control. 

Consistently updating contracts reflects a company's commitment to maintaining strong, transparent business relationships and optimizing workflow efficacy. Make contract reviews a routine part of your business operations to ensure that every agreement aligns with your organization's goals and regulatory requirements.

Streamline contract management processes with DocJuris

It’s time to streamline your processes and unlock your contract's full potential with robust contract management software. DocJuris offers a comprehensive solution that transforms contract management from a burdensome task into a strategic advantage.

The platform goes beyond basic storage, offering a full suite of features designed to streamline every stage of the contract lifecycle and empower businesses with efficient contract management. 

Here's how we complement the critical components of contract management:

• Automated workflows: Set up triggers for sending reminders, tracking deadlines, and automatically routing contracts for approval. This ensures timely execution, minimizes human error, and frees up your team to focus on more strategic initiatives.
• Standardizes contract templates: DocJuris provides a user-friendly platform for creating and managing contract templates. Build a library of pre-approved templates for common agreements, ensuring consistency and reducing drafting time. The platform also allows for easy customization within templates to cater to specific needs.
• Streamlines approvals: Ditch the email chains and paper trails with our built-in approval workflows. Assign tasks electronically, track approvals in real-time, and set up notifications for stakeholders. This promotes transparency, facilitates faster decision-making, and eliminates bottlenecks in the approval process.
• Creates a single source of truth with a centralized repository: Need a place to store all your contracts? DocJuris offers a secure cloud-based repository for this purpose. Access your contracts from anywhere and eliminate the risk of losing physical documents or version control issues. DocJuris offers role-based access control so that only authorized personnel can view or edit contracts.
• Delivers data-backed insights: Our robust reporting and analytics tools can help you gain valuable insights into your contract performance. Track key metrics like turnaround times, approval delays, and potential risks. Use this data to identify areas for improvement, measure the effectiveness of your processes, and make data-driven decisions to optimize your contract management strategy.
• Simplify compliance: DocJuris helps you stay ahead of the curve by providing alerts and reminders for upcoming renewal deadlines and potential compliance risks. This proactive approach minimizes the risk of non-compliance and associated penalties.
• Promotes collaboration: With internal messaging features and document-sharing capabilities, DocJuris promotes collaborative efforts. Break down departmental silos by enabling real-time communication and document sharing between legal, sales, procurement, and other stakeholders involved in the contracting process.
• Simplifies review and update: We streamline contract review with advanced tools like document comparison and AI redlining. It highlights changes, tracks revisions, and streamlines the review process for existing contracts, ensuring they remain aligned with your evolving business needs.

DocJuris helps you transform contracts from mere paperwork to strategic assets that drive growth and protect your business.

Discover how using DocJuris can help you unlock the full potential of your contracts. Request a Demo Today!