Title: 5 Benefits of Proactive Contract Management: (How You Can Achieve It)
Have you ever been in a situation in the business world where you wondered how an organisation can manage their contract's creation, negotiations, implementation and agreements so well? What magic wands do they have that you don't?
Even after spending a lot of your precious time, why are you not able to get similar results? If so then this article is for you. Proactive contracting is the key to all the chaos going on in your business life.
Proactive contract management means taking a more strategic, thinking forward and focusing on maximisation of contract value and minimising risks. It emphasises early involvement, constant monitoring, and the use of latest technology. Proactive contract management is different from traditional contract management because in traditional management the issues are only addressed and solved as they occur. On the other hand proactive contracting takes a forward thinking approach to mitigate risks beforehand.
In this article we would go into details of what are the benefits you can have from proactive contracting and how you can incorporate it in your business. So without any delay lets dive into the blog.
1. Enhanced Risk Mitigation
Proactive contract management plays a vital role in saving businesses by pointing out potential threats to a business with the help of streamline contract management. It automates the whole system for you. Also this approach would help you form and implement effective strategies in order to mitigate many risks like contract breaching or privacy issues and any kind of legal or regulatory error that might cost you a lot.
2. Improved Operational Efficiency
Proactive contract management ensures operational efficiency in numerous ways. For example it allows all the stakeholders to access easily to the terms and policies of a contract. In this way there would be no chances of any disputes and the process would flow easily. Also proactive contracting enables one to automate the process of contract creation, negotiation ,execution and then monitoring which saves a lot of effort and time of employees. This way the operational efficiency of the organisation and its workers would have time to focus on the growth of the company rather than managing administrative tasks..
3. Powerful Business Relationships
You might come across a company and wonder why this organisation has a thriving business through long term customers . Why do their customers keep on coming back to them? What is the reason? The reason is Proactive contract management. It allows a business to fulfil all the requirements of their clients and always exceeds them. By managing the contracts well you can gain customers, you become reputed for your services and your business ties become stronger.
4. Cost Savings
If you are using proactive contracting your financial losses surprisingly decrease. The reason is you can spot any potential risks and take necessary precautions that would cost you money. With this approach you would not have to worry about any errors and mistakes resulting in legal penalties. Everyone can see the contract before its sent so you would be able to avoid disputes over payment invoices and non compliance.
5. Better Compliance with Legal Requirements
By using proactive practices in your contract management you can avoid any legal and regulatory compliance risks. This approach helps you draft a contract that adheres to all legal and regulatory requirements by ensuring compliance. It enables the managers to stay informed about any change in law and regulations which might affect an existing contract. In this way, better compliance is achieved.
How Can You Achieve Proactive Contract Management?
-Implementing a centralised contract management system;
You can achieve proactive contract management by implementing a centralised contact management system. This system would involve the right use of technology, having an effective process and collaboration between the stakeholders. For this purpose you must first assess your needs then select a contract that is suitable for you. After that you should establish contact with the standardised process of templates and later on ensure compliance. Thai way you would be able to achieve proactive management.
Establish a dutiful contract Administration Team
Establishing a dedicated team for contract management is the most vital part of all the process. If you don't have the right people you would not be able to achieve great outcomes.
In this step you must choose eligible people. Make a list of the skills you need for the task. Select employees with that skill set then define their roles and responsibilities clearly. If needed, provide them with proper training and to work on proactive contracting.
Develop and Enforce Contract Management Policies and Procedures
The next step while achieving proactive contract management is developing and enforcing policies and procedures.For this purpose you should first of all assess the needs and requirements of your organisation. Look for the challenges you face while managing contracts. After this define the objectives of your policy, what you want to gain as an end goal and then form procedures to achieve them
Set Up Key Performance Indicators (KPIs)
After formulating your policies and procedures you must make sure that your organisation is achieving proactive contract management. For this purpose you must set some key indicators AKA KPIs. These KPIs should be formed with an alliance of your organisation’s objectives and the areas you want to improve.You should then define a clear and realistic target for each KPI and keep on monitoring it. For monitoring agenda establish a data collection mechanism that how you would collect data for KPIs measuring. Set a monitoring system and its frequency that how often you would monitor the performance indicators.assign thai responsibility to a team or an individual to and ask them to analyse it.
Constantly Review and Improve Contract Management Processes
The last step to achieve proactive contracting is to review and improve your management process. By analysing your KPIs you would get a fair idea about the challenges and gaps in your contract management. You must regularly review contract management and performance of your team. By reviewing constantly you will be able to keep on improving constantly.you may ask the stakeholders for feedback so you wou;d knwo where you lack effectiveness. All this will ensure continuous growth in your proactive contract management
To Sum it Up
If you want a thriving business with a continuous lane of clients you must adopt proactive contract management. This approach enables streamline contract management which would save you from panicking over your tasks, avoiding mistakes and errors that cost you a lot of money.For achieving proactive management you can invest in various tools and softwares which will ensure your growth.
