Contract Management: what is it for and how can it be optimized?

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1. What do we call “contract management”?

Contract management refers to contract management processes throughout the contract cycle.

These steps consist of manage each contract from A to Z : from negotiation to the end of contractual commitments, including the signing of the contract.

Contract management can concern every type of contract. For example:

sales or service contracts;

subcontracts;

rental contracts;

employment contracts;

etc.

The implementation of effective contract management makes it possible to reduce costs, to have contracts that comply with current standards, to monitor compliance with contractual obligations and therefore to reduce risks.

2. What is the purpose of contract management?

Contract management consists in following the steps of contract management in order to optimize your corporate contracts. It presents numerous advantages. Namely:

the conformity of contracts: each document (and each clause) is checked to ensure compliance with the standards in force;

maximize the value of contracts: each party can protect its interests during negotiations and verify that contractual clauses and obligations are respected throughout the execution of the contract;

improve communication between the parties: from negotiation to the execution of contracts, the parties exchange numerous times to find the conditions that suit them and to maintain business relationships;

reduce costs: verifying contracts and monitoring contractual commitments helps to avoid claims, delays, penalties and associated sanctions in case of breaches.

3. What are the stages of contract management?

Contract management can be divided in four steps :

the contractual proposal;

the validation of the contract;

monitoring contractual obligations;

the closure or renewal of the contract.

The contractual proposal

The life of a contract begins during its preparation (for example, for a call for tenders to obtain a public contract in public works).

Each party assesses its needs in order to Define the terms and conditions of the contract, that is, the rights and obligations of each party.

Generally, only one party develops a first contractual proposal in order to have a basis for negotiations.

Validation of the contract

Once a contractual proposal is issued, you enter the Negotiation phase. This consists of one or more exchanges between the parties to find a common agreement on the commercial and legal conditions of the contract.

At this stage, you should check and validate each clause in order to proceed with the signing of the contract. To do this, the contract can be subject to numerous changes before reaching its final form.

Once the final version is found, it's time to do it approved by your internal services to ensure that it complies with your interests and with the laws in force. Only after this step can you sign the contract. This indicates your agreement with the terms of the contract.

To note: All contracts must be subject to more or less thorough legal verification according to its legal regime. Indeed, it is essential that it complies with current standards. Otherwise, you risk various sanctions with serious consequences such as the cancellation of the contract or the modification of the contract by the administrative judge or the judicial judge. In addition, some illegal clauses may be deemed to be unwritten. In this case, the contract will continue to be executed, but without this clause.

In order to conclude the contract, you have the option of using the electronic signature. This has the same legal value as a handwritten signature and makes it possible to speed up the conclusion of contracts.

Axiocap has set up a advanced electronic signature to meet the standards of the dematerialization of legal registers and minutes. You can send your documents in a few clicks from the safe to get a digital signature from the other parties.

Monitoring contractual obligations

Once the contract is signed, it is necessary to Follow its execution until it expires. This can be done by:

administrative management of the project:

verifying the compliance with contractual commitments;

risk management;

complaint and litigation management.

Good to know: It is also necessary to archive contracts once you have signed. The easiest way is to opt for a digital safe so that everyone can access them as soon as they need them. The risks of loss are reduced and security is strengthened.

For example, Axiocap Offers you a secure and collaborative digital safe. This 100% French accommodation allows you to:

to access your documents at any time;

to write and sign your contracts online;

to respect legal retention periods using archiving with probative value.

The closure or renewal of the contract

At the end of the contract, you have two choices: Close or renew it.

The contract is closed when it expires. You should therefore check that all obligations have been met before ending the contractual relationship.

Conversely, it is possible to renew a contract, under the same terms or with new conditions. You will need to go through all the stages of contract management. However, these are simpler and faster.

4. How to optimize contract management?

Optimizing contract management in your business starts with implementing best practices in order to effectively manage contracts.

The first instinct to have is to limit manual processes which can lead to errors. Conversely, automating tasks (generating contracts, monitoring deadlines, etc.) will make you more efficient.

For example, using contract templates is a time and productivity saver. Your contractual documents will be consistent and their writing/revision will be all the more rapid. In fact, contract negotiations generally cover only 10% of contracts. It is therefore possible to have a library of contract and clause templates.

In addition, the establishment of a monitoring the status of contracts is essential to have a reliable vision of the situation and to quickly detect problems (delays, blockages, etc.). This will allow you to take action to find corrective measures.

In order to help you with the various contract management processes, you can hire contract managers and/or use management software.

Hiring contract managers

In order to ensure the management of your contracts, you have the possibility to recruit a contract manager. This contract expert will manage contract management with your company's teams.

His role will be to coordinate them and verify each stage for the successful completion of the project. He will start by drawing up a contract that protects your interests and in compliance with current contractual standards.

During the execution of the contract, he will be responsible for following up with the project managers. He will therefore ensure the resolution of disputes and must master the legal and technical aspects of contracts.

The use of contract management software

With or without a contract manager, your company can use contract management software to manage its contracts.

These software generally offer various services to support you in all stages of the contract life cycle such as:

contract templates;

a contract modification module;

real-time monitoring of the life cycle of contracts;

archiving contracts.

To note: There is also online contract management software (SaaS).

5. Why move to the dematerialization of contract management?

La dematerialization of the stages of contract management can be a competitive advantage for your business through:

24/7 access to information

The use of dematerialization will allow easy access to your company's contractual information.

Each team will be able to read the terms of the contracts as soon as they need them without having to carry out long research.

However, safety has not been forgotten. Only persons with access rights will be able to access the contractual clauses.

Furthermore, once contracts have been archived, they cannot be amended unilaterally.

Cost control

The dematerialization of the contract management process is less expensive than manual treatment.

Automating some steps could do Save many hours of work to your teams on time-consuming tasks.

In addition, some software has Data Room allowing each party to connect to it in order to conduct online negotiations. Proposed changes then take the form of comments on the contract that the other party can validate or rectify (create a counterproposal). Treatment and travel costs are thus reduced.

In addition, the digitalization of contract management reduces the risk of errors and therefore, the costs to correct them (contract modification, payment of penalties, etc.).

Real-time contract monitoring also makes it possible to make strategic decisions at the right time.

Risk control

A contract is used to frame the rights and obligations of each party.

Some software has modules verifying the conformity of the documents and their legal and financial validity. They alert you in case of contractual non-compliance so that you can review the clauses in question so that they comply with the legal regime in force and avoid questioning the contract, as well as possible legal proceedings.

In addition, by entering all contractual information online, it is possible to set up reminders for facilitate monitoring and reporting (for example, reminders of deadlines or notices).

A time-saver

As we have seen, dematerialization makes it possible to quickly track changes and comments on contracts.

Good to know: Workflow modules make it possible to automate the creation and validation of contracts, as well as the automatic updating of contract clauses.

In addition, your teams will be able to access contracts at any time. Some software offers search engines in order to find the clause you need in a few clicks.

Finally, the most advanced software has modules ensuring the monitoring the status of contracts. In particular, they can:

have a customizable monitoring dashboard;

automatically create dashboards and reports to have a global view of the essential information of your company's contracts;

monitor the evolution of contracts (versioning).

Contract management (or contract management) is therefore a key process for businesses. It aims to manage each stage of the contract life cycle. It reduces costs, ensures compliance with standards, and optimizes the value of contracts. Digilatizing these processes and hiring a contact manager can help you improve the efficiency and security of your contractual operations.

To go further in dematerialization, the collaborative platform created by Axiocap offers you various functionalities to assist you in managing your shareholding, including: