What is Contract Administration and How is it Different From Contract Management?
When you think of contract administration and management, you probably don’t picture two separate practices. However, both play a different role in an agreement’s lifecycle, and it’s essential to understand the difference between the two. This article will review the differences between them and the tools you should use to optimize each process.
Why People Often Confuse Contract Administration and Management
People often use the terms contract administration and management interchangeably, leaving many wondering, “what is contract administration?” Both processes represent a different page in an agreement’s life cycle. For starters, contract administration occurs pre-signature and involves making any necessary changes before the deal takes effect.
On the other hand, contract management happens after the agreement is signed. The contract manager must ensure that each party is adhering to their legal obligations. Both phases require a comprehensive skill set and a strong understanding of how contracts work to carry out their roles successfully.
What is Contract Administration?
The contract administration process encapsulates the planning and execution of an agreement. The planning portion of contract administration involves searching for potential business partners, making necessary revisions, and negotiating contract terms such as prices, delivery dates, and performance. Once the contract is ready for signatures, it’s handed from the administration team to the management team.
The Importance of Contract Administration
Implementing a successful agreement administration process is a crucial factor in forming beneficial agreements for your business. Without an efficient process, your company won’t get the most value out of its partnerships because it lacks the strategy and resources to do so. As a business owner, you must dedicate time and energy to optimizing your administration process. Once you do, your business will form healthy partnerships that are mutually beneficial.
Tools and Techniques for the Contract Administration Process
Improving your agreement administration process does not have to involve manual labor. In fact, one of the simplest ways to boost it is to implement a few tools and techniques for the contract administration process. These tools will automate drafting, negotiation, organization, and more with little to no effort on your end.
Here are some of the most beneficial tools to use for contract administration:
A repository makes the administration process simpler by securing all of your documents on the cloud for easy access. It allows team leaders to organize files, edit permissions, employ version control, collaborate, searches for pre-existing documents, and more, all on a single platform. Besides making contract administration easier, a repository also offers advanced security features that ensure your private information isn’t accessible to malicious individuals.
Automated workflow tools significantly reduce the contract lifecycle by notifying the right team member at the right time with an intelligent notification system. This ensures that there’s no confusion on who should be doing what task as they will be automatically assigned. Additionally, a smart workflow lets you oversee each stage of the agreement life cycle, allowing you to discover what works best for your team.
Automated document assembly
Automated templates or document assembly features enable you to breeze through the drafting process. A template makes creating legal documents easier by giving you a standardized copy to fill in the blanks with your unique information. Using templates allows you to develop compliant, accurate, and standardized forms to prepare for approval efficiently.
Intelligent tracking tools
If you want to optimize your administration process, it’s essential to gain insight into what’s working and what’s not. That way, you can develop a strategy and find what works best for your organization. Advanced tracking features available on most contract platforms offer data and performance insights, making it easy to find your bottlenecks.
The Difference Between Contract Administration and Management
Now that we know what contract administration is, we can compare it to contract management. Contract management begins after administration is completed. During this phase, managers are to ensure that both parties meet their obligations as efficiently as possible. They also have to ensure that each party has the resources needed to hold up their side of the deal. It also deals with the signing and post-signing processes, such as collecting signatures and making necessary changes after the deal is closed.
On a broader scope, contract management also involves organizing your company’s documents and ensuring that deadlines are met, terms are renewed, and that they are beneficial to your business.
Contract Administration and Management Systems
Creating agreements and managing them afterward are essential practices if you want your business to remain profitable and competitive. However, doing both manually is nearly impossible, especially if you are looking to make each process as efficient as possible.
Today, many companies are already using contract administration systems and management software to their benefit, so to keep up, you must implement these resources as well. Investing in technology-driven automation gives your business room to expand, reaching a broader customer base and increasing profits. It is a worthwhile investment that will quickly pay for itself once you begin using it to optimize your agreements.
What is a Contract Administration and Management System
Typically, when people are talking about contract management systems (CMS) it includes administrative tools as well. Such systems are all the tools, technologies, and strategies you implement to automate your agreement lifecycles.
Manually handling documents is quickly becoming an outdated practice as it is proven to be inefficient compared to modern technology. If your business still relies on manual procedures, it runs the risk of falling behind its competitors and shrinking its profit margin. Therefore, strong administration and management systems are necessary if you want to ensure all your agreements are drafted, executed, organized, and modified efficiently.
Benefits of implementing a contract administration and management system include:
- Improved document organization
- Greater insight and visibility into agreement lifecycles
- Decreased risk when making deals
- Saved time and money
- Healthier business relationships
- Higher deal closure rate
- Increased productivity levels
Commonalities and Differences Between Contract Administration and Management
Contract administration and management are two essential processes in an agreement’s life cycle. Likewise, you can’t have one without the other, considering that administration handles the document’s creation and management handles everything after. However, just because they are closely related does not mean that they are the same. They are both different phases that require their own tools and strategies. Therefore, you must focus on optimizing both practices if you want to maximize your business deals’ success rate.