The lifecycle of a business contract is much more complicated than many people realize. It begins when the need for a contract is identified and continues beyond the point at which it is executed. Here is why every business needs contract lifecycle management.
Start Negotiations the Right Way
Kicking your contract negotiations off in the right way can go a long way to ensuring that the rest of the process is as smooth as possible. Contract negotiations are an inevitable part of business, especially as your business grows and expands. It is, therefore, sensible to have a clear policy in place for how you open negotiations once the need for a contract has been identified.
The contract lifecycle management process begins as soon as a contract is requested. Before you go into negotiations, you should have a reasonably good idea of what you want your contract to look like. This includes details about the start and end date and the most important terms to be included.
Improve Your Organization Throughout the Life of a Contract
Good organization is essential throughout the lifecycle of a contract. In fact, whether a contract ultimately benefits your business or not can come down to organization as much as the actual terms of the contract. Without good organization, essential tasks like compliance monitoring can easily fall through the cracks. It doesn’t matter how good the terms of a contract are if other parties are free to break them at will.
Good organization will also ensure that you are walking into negotiations with all of the information you need to secure the best possible terms for your business. On the other hand, if you are disorganized, then you are going to have to waste time and resources establishing the basic facts that will guide your negotiations.
Be Prepared for Renegotiations
The contract lifecycle continues after a contract has been signed and executed. Once you have finalized and implemented your contract, you need to begin monitoring what its effects are and ensuring that all parties, including your own, are maintaining their compliance with the terms. Both of these will inform your decisions when the time to renegotiate the contract is approaching.
The way that you approach your renegotiations is just as important as the approach that you take to drafting the original contract. If the contract is working well for your business, then you will want to push to maintain similar terms. If you think that the arrangement is also providing significant value to the other parties involved, then you may be able to push them for better terms. Throughout the life of your contract, you should be looking forward to the point of renegotiation.
Contracts are important for any business. Whether they are contracts between you and your employees or between you and other businesses, you cannot afford to fall afoul of the terms within, or to negotiate poor terms to begin with. Contract mistakes can be very expensive and have widespread consequences. Practicing good contract lifecycle management will ensure that you are using contracts to their full potential at every stage.
