Contract management is the process whereby contracts get created and finally executed. The process of making a contract can be tedious; therefore, despite how skilled a contract creator can be, they can be prone to contract management errors as a human is to error.
Mostly those business that manually handles their contracts are most prone to mistakes, which results in low productivity, compliance issues, and lack of teamwork. Any hiccups within your contract process can greatly impact your organization or business. When contracts are not handled with care or left unlooked at can result in mistakes in the contract, which are left unchecked, leading to loss and hindrance to the growth of the revenue.
To help, the following are the eight most common mistakes you should avoid during the contract management processes and also ways to which you can be able to mitigate them.
Over-Dependency On Paper-Based Systems
In an era whereby everything is becoming digitalized, reliance on the manual paper-based system seems outdated. Also, paper-based systems can lead to sluggish performance of the workflow of the business, hence calling for online contract management software implementation.
This is mostly observed when drafting contracts. Inconsistent use of a language can lead to unproved language and terms being introduced into business contracts which can confuse the signing parties. This mistake can only be catered to by ensuring your business have contract templates. If each new contract writer lacks the contract document template, it may lead to each creator having to use different structures, formats, and styles.
Not Involving All Stakeholders in Contract Negotiations
Negotiation is one of the crucial factors in any business. When managing contracts, an organization can mistake not involving the relevant contract stakeholders, most importantly at the negotiation stage. Just assuming the negotiations went well without the detail of the agreement can also lead to time consumption. Not involving all the stakeholders can later lead to a conflict of interest between the involved and absent parties during the negotiations.
This hindrance results in a no smooth workflow. For all related teams to be involved, there can be an enlisted list that will help double-check if all parties are involved. Simply involving all teams empowers the teams to have their say on the contract terms that are most relevant to them.
Neglecting Significant Obligations and Missing Deadlines
Missing important deadlines is a common mistake most organizations make. With missed deadlines, it can cause frustrations and financial losses to the company. Without the contract management software, most companies tend to miss deadlines as the workers may have been busy.
The only solution to this problem is by ensuring that there are contract renewal reminders or alerts. This can only be helped out by contract management software which will notify the teams of the upcoming contract deadlines, renewals, and expiry dates.
Poor visibility in a legal and business team involves the team not having clear know-how at which stage the contract is or even where it is being stored. This mostly occurs whereby the contract ends up having multiple versions of the same contract and storing the contracts across different shared drives and files, making them difficult to locate. Poor visibility ends up leading to confusion among the team. Storing the contracts on multiple and different shared drives makes it hard to track them.
The only way a business can avoid such a mistake I by ensuring that the contracts are stored in a centralized place. This mistake should be avoided as contract documents contain sensitive information which needs to be securely stored without access of everyone but only the assigned ones.
Use of Outdated Signing Methods
Most companies have long been using the wet signatures method of signing contracts, which is considered outdated and time-consuming. The solution to this mistake is the implementation of electronic E-signatures, which helps reduce unnecessary tasks and saves time.
Use of Multiple Tools
Since the contracting process takes a long to be completed, many companies tend to switch between different tools. For example, a manual contract workflow process whereby the contract needs to be created in word shared and negotiated in emails, signed using wet ink, then saved to drive seems much more tedious and creates a lot of friction in the contracting process. This is because it can be hard to track down who has the drive and who is doing the signatures creating a back-and-forth moment.
This kind of mistake made by most organizations can only be done away with by the implementation of contract management software which will allow for the creation of the contract from start to finish in just one centralized place. With the software, the contract process gets to be end-to-end with just one solution as the software will create, review, negotiate, approve, sign and store the contract without needing to leave the platform.