When organizations think about governance, risk, and compliance initiatives, managing contracts is not typically the first thing they think about. However a contract is, by its nature, a governance tool that is designed to mitigate risk.
In a recent webinar, we explored the challenges and risks of poor contract management, and outlined best practices for effective contract administration that can be implemented by organizations of any size. Watch the recording of our webinar for the full story, or keep reading to see the highlights!
Do any of these sound familiar?
Whether we are helping organizations manage contracts from the buy side (contracts with vendors or suppliers) or from the sell side (contracts with their customers), there are some common challenges that organizations face. Do any of these sound familiar?
We waste a lot of time tracking down contracts when we need them.
Contracts have renewed automatically before we had a chance to renegotiate the terms.
We received an invoice for a service that we weren’t using, but the contract continued to auto-renew.
We have been in non-compliance with a client contract due to a lack of communication around non-standard terms.
Our company has multiple service providers for similar services, because we were not aware of all of our existing contracts.
It seems like we’re always wasting time trying to remember who has to approve what and when.
What’s at risk with poor contract management?
Managing contracts well is good business. Poor contract administration wastes time, damages your reputation, and impacts your bottom line.
Simply put: Your time, reputation and money are at risk.
Seven contract management best practices for any size organization
Good contract management involves people, processes and technology – and we’ve outlined seven best practices that require all three. The best practices below can be implemented by companies of any size – and policyIQ’s GRC platform can provide the technology you need!
1. Central Repository Identify or procure a central location that can be accessed by the right people at the right time. Cloud-based solutions are a great choice, as they offer accessibility from any location on a 24/7 schedule.
2. Define & Capture Meta Data Identify key data, and capture those details within your repository. Expiration or renewal dates, contract value, contact information, and details about non-standard terms can all be critical data points that will feed into…
3. Key Reports & Metrics Use that meta data to create key reports and metrics that drive your business decisions. When evaluating contract administration systems, validate your ability to customize the data captured, as well as the flexibility of reporting on that data.
4. Robust Search Your central repository should provide a robust search, so that you can find contracts by key word or phrase, searching through all contract documents.
5. Identify Contract Owner (outside of procurement!) Most organizations identify a contract owner, but often the internal contact is not the business user of the product or service. Clearly identify, and maintain, the contact person for every vendor or supplier contract – and ensure that the contact knows and understands how those products or services are being used.
6. Alerts and Reminders Don’t miss a deadline or allow a contract to renew without notification. Be sure that you can set up alerts – via email or regular reporting – to let the right individuals know when contracts are up for review.
7. Clear Procedures All of the technology in world is only as good as the procedures that are designed to ensure that it is used properly. Create procedures that instruct your employees on the who, what and where of contract management – and keep that documentation accessible.
policyIQ can help!
policyIQ offers a simple, cloud-based platform for Governance, Risk, and Compliance initiatives. Implement best practices for effective contract administration within just a few days!
Would you like to improve your contract management process to decrease risk? Contact us today, and we’ll be happy to help you lay out a plan for the people, process, and – our specialty – the technology you need!