Is Your Contract Process Healthy? A Checklist of the Key Steps to Verify
The contract process is not necessarily simple to run perfectly nor is it ‘exciting’ enough to inspire businesses to put much effort into perfecting their system.
So, it is far better to have a checklist or a set order of steps in order to streamline & automate the entire contract process and make sure everything goes as smoothly as possible, every single time.
What Is a Contract Process?
A contract is a legally binding agreement between two or more parties, with each party having various requirements that they must uphold in order to fulfill their side of the contract.
A contract process is a system that businesses use to create, negotiate, approve, sign, manage, and renew legal contracts between them and other parties.
Contracts are the heart and soul of all commerce – without them, it would be nearly impossible to make deals with other organizations since there would be no legal ramifications of failing to realize contractual obligations.
Without contracts, operating a business would be chaos. It would be difficult to buy products or sell services, and contracts benefit all parties involved – it makes it easier for everyone to know exactly what is required of them in relation to the agreement that is transpiring.
Naturally, the contract process is not ‘exciting’ and it can be difficult to inspire employees or business personnel to dedicate time in order to structure a set system that essentially ‘automates’ the contract process.
That said, it is very important to execute a structured contract process that is unique to your business and works for your organization, depending on the type of business you are in, the type of deals you engage in, whether you are selling products or services, etc.
So, this article will include the key steps that should be incorporated into every businesses’ contract management.
Contract Process Checklist (Key Steps)
Every business’ contract process is unique to their specific organization and operations.
That said, there are certain ‘key steps’ that should be used in every contract management process in order to make it as easy as possible.
You can use these steps as a ‘checklist’ to ensure your contract lifecycle is as effective as possible.
Key steps are as follows:
The contract preparation process is one of the most important steps of the contract process, and if your preparation stage is not functioning properly then this will impact the entire lifecycle of a contract.
Proper organization is essential for the preparation phase – you should draft a document that outlines the needs and goals of what the contract is intended to do in the first place.
Actually writing the contract does not have to be difficult or timely.
When contract form templates are used, contracts can be ‘written’ very quickly – these contracts are automatically created to be legally compliant with all the necessary clauses and terms that must be included to make contracts legally binding.
It’s important that your law team (or at least one lawyer) should go over the contract in the writing stage.
The negotiation phase can be lengthy if not enough research is involved beforehand.
You should know what the other party might want and what terms you can settle with.
The contract approval process flow should be automated – by using software, contracts are automatically sent to the appropriate personnel or department heads that must approve a contract for it to be enacted.
The contract sign off the process can be difficult with traditional signing processes, but it doesn’t have to be.
Signing must be done in person or electronically – preferably, use software that allows for electronic signing via the internet.
Monitoring contracts over the duration of their ‘lifespan’ can be tricky and overwhelming without the use of the software.
Monitoring contracts is the contract compliance process – ensuring that all legal obligations are met.
When software is used, monitoring 100’s of contracts is made easy.
Also, contracts must be constantly revised and changed over time – the contract change control process is also made easy with software.
When contracts are getting close to the expiry date, they must be renewed – monitoring contract dates are automated when using software, and this is majorly helpful for businesses.
Benefits of a Healthy Contract Process
A healthy contract operation results in saved time, labor hours, money spent, and reduction of legal ramifications when obligations are not met.
The better your contract management process, the better your business will run which allows for more time to spend focusing on what matters – sales and growth.