Contract management not only speeds up contractual processes but also mitigates risks and prevents revenue loss for the company. But for this, it has to be in the right hands. A contract specialist is your person here.
It’s not enough that the team is successfully seeing the contracts through to completion; they also need to do it quickly and cost-effectively. That is, their goal is not only to furnish contracts but also to optimize the processes and cut down on costs. And a skillful contract specialist with the proper vision can make things move smoothly.
SMART framework
Base your vision on the SMART framework. This way, you’re not just shooting for goals that are vague and largely unattainable. You keep your efforts worthwhile with specific, measurable, achievable, relevant, and time-based goals.
- Specific: clearly state your goal so you know what exactly you’re trying to achieve
- Measurable: aim for a quantifiable goal, so you can measure your progress and know when you’ve actually achieved it
- Achievable: people are more motivated when they know the goal is actually achievable, so define the steps to achieve it.
- Relevant: your goals won’t matter as much if they don’t fit into your company’s greater purpose, so always aim to feed the bottom line
- Time-bound: goals rarely come to fruition if they’re not tied to a deadline, so make sure you define a specific time frame for your objective
Here’s a rundown of the top smart goals for contract specialists that will help speed the contract management up and forward.
Shorter contract cycle times
Sluggish contract cycles can slow down your business operations. Your sales team, for one, will have trouble closing deals if sales agreements are not completed on time. Moreover, time-consuming contracting processes will have your team burn away work hours that they could otherwise spend on value-added work.
The time range for the contract lifecycle varies depending on the type of contract and deal you’re handling. You need to set an acceptable timeline for taking contracts from initiation to the sign-off stage.
Subscribing to a standard time frame will push your team to look closely at the processes and determine ways to speed them up. You can identify inefficiencies with the approval processes, document management, and communication, then optimize them accordingly. Here are some specific steps you can take:
- Digitize the data and files
- Store all the data and files in a single repository
- Automate repeated tasks
- Establish an official communication channel for everyone to use
With a timeline to guide them, your team is bound to find creative ways to keep the processes efficient.
Timely delivery of contract obligations
Contracts are legally binding, so you can’t take your obligations lightly. And it’s not enough that you’re fulfilling your deliverables, you must also meet your obligations on time. Here’s how you can avoid delays:
- Prepare checklists to ensure relevant stakeholders are keeping up with their responsibilities and deadlines
- Set alerts for pertinent milestones and dates
- Perform periodic reviews of your active contracts to ensure you’re meeting all your obligations
Remember to keep a checklist of tasks, milestones, and deadlines to ensure nothing falls through the cracks.
Meeting quality expectations
The quality of the output is just as crucial as its timely delivery. Contracts often specify a certain level of quality that your products or services must meet.
For instance, pharmaceutical companies set quality agreements to ensure manufacturers adhere to regulatory standards and are ready to provide documents on product specifications and batch records. Software providers are commonly required to keep up with service level agreements (SLAs), which specify the service standards they must meet.
To ensure your company is meeting the quality requirements as specified in your contracts, you’ll have to do the following:
- Track related contractual terms
- Use customer satisfaction ratings to measure performance
- Monitor the performance of the process owners
- Furnish reports that emphasize areas for improvement
- Prepare and execute performance improvement plans based on the reports
Meeting quality expectations is instrumental to the continued success of your company, so take these steps and do them well.
Continuous innovation
Your company should never stop working with the other parties to ensure you’re not only meeting the product or service requirements but also exceeding them. Foster a spirit of innovation and partnership with the following tips:
- Keep the partnerships alive with steering committee meetings that allow you to discuss current product and service performance and the ways that you can further improve it
- Get senior executives involved, so you can make alterations to the agreed-upon deliverables without having to officially make a change request (CR)
- Adopt an explorative mindset and brainstorm ways to incorporate new tools into your existing systems and processes
- Investigate how recent legal tech trends can help you, including automation, artificial intelligence, and legal ops technologies
- Discuss how you can selectively outsource tech solutions to external providers
You’ll have to encourage a culture of innovation to keep the creative juices flowing while exploring ways to improve your processes and outputs.
Improved contract governance and risk mitigation
To ensure effective contract governance and risk mitigation, you need visibility of all your contracts. Otherwise, you’ll get an inaccurate picture of your contracts’ performance. You’ll also fail to spot potential risks, such as expiring licenses and changing state regulations. Take the following steps to achieve contract management transparency:
- Store all your contracts in a centralized repository
- Assess and address risks not only before the contract is finalized but also while it’s active
- Carefully evaluate the eligibility of suppliers or service providers
- Collect compliance certificates
- Reassess potential risks regularly
- Establish a process for managing escalations
- Track contracts that use clauses that are not in your pre-approved list and set automated notifications to alert you to those causing the deviation
- Make sure your team fully appreciates the importance of complying with government regulations, company performance standards, and contractual requirements
Proper contract governance and risk mitigation will help prevent unwanted legal consequences, so don’t take these steps lightly.
Cost-effectiveness
Your goal is to make the entire contract lifecycle cost-effective. Every process must produce great results without costing a lot of money. You can achieve this with the following:
- Streamline workflows
- Automate repeated tasks
- Set up a library of templates, terms, and clauses
- Closely track non-compliant contracts that result in financial penalties, inefficient processes that slow down the contracting process, and unmet contractual obligations that lead to revenue loss
- Never miss out on opportunities to negotiate bulk discounts or wholesale prices
Cutting down the costs of your operations can significantly impact your company’s bottom line, so make sure you devote ample attention to these steps.
Conclusion
As a specialist, you’ll meet countless challenges in contract management. But with these smart goals to serve as your north star, you’ll always have a strong sense of direction and purpose.
Cutting down the time it takes to go from contract initiation to execution, meeting contractual obligations and quality expectations, effectively mitigating risks and cutting down on costs will help ensure you’re managing contracts in a way that feeds your company’s bottom line.
It’s easy to see how contract lifecycle management (CLM) software can help you meet these goals, from storing all files and data in a centralized repository to automating a large part of the contracting process. Learn more about the AXDRAFT all-in-one contract management platform to see how it can help you.
The primary goal of contract management is to efficiently manage contractual processes and obligations. This way, your company can close deals quickly while ensuring you’re meeting your end of the bargain.
Contract key performance indicators (KPIs) are the performance metrics specified in an agreement. They are used to evaluate performance and measure the success of the contract.
As a contract specialist, you’ll be responsible for all the stages of a contract’s lifecycle, from drafting the agreement to overseeing its execution. You need to work well with various groups of people and follow internal policies and external regulations. You should also be well-versed in the tools that make contractual processes efficient.
Although a law degree is not necessary to become a contract specialist, legal education can help you get ahead if you don’t have on-the-job experience.
An effective contract manager has strong attention to detail, a systematic approach, a collaborative mindset, and problem-solving abilities. The successful ones take the initiative, overcome obstacles, leverage technology to optimize processes, foster team collaboration, track performance, provide feedback and suggestions for improvement, and continually evaluate contractor performance against contract specifications.