Have you landed that business deal that you have been honing in on for a while? Well, it is probably time for you to sign a contractual agreement. To avoid any pitfalls in the long run, however, it is crucial that you understand the various stages of having a successful contract. More so, the process may sum up to what is mostly known as contract management lifecycle. The following are the seven main stages in contract management.
- Preparation
At this point, the needs of the contract are established. What is the purpose of the agreement? What do you plan to achieve by getting into this contract? These are some of the questions that come into play before anything else should be done. It is important to note that contracts exist for the purpose of mitigating any potential risks and protecting the interests of the parties in the agreement. Once the intentions for the existence of the contract are clear, you should be ready to hop into the second stage.
- Draft the contract
If anything is not clear here, it is wise to seek counsel from an attorney, lest you get yourself into something you cannot handle. An attorney will help you in ensuring that everything that is required is included. Be very clear on the wording while drafting a contract: and again, seek clarification for ambiguous areas.
- Negotiate the contract
After you have worked on a draft of the contract, it is time for you to negotiate the contract. It does not matter how well you have prepared or how perfectly you have drafted it. To create a strong relationship with the other participant is vital. The only way to do it is by ensuring that their needs have also been considered in the contract and whether they are satisfied. Create space and time to work on any changes that may be required. It is the first step towards creating a healthy relationship with the other party.
- Seek approval
Before you go ahead and finalize the contract, you should not skip this stage. Are both parties involved okay with the contract? If that is the case, it is now time to ask to go ahead and sign the agreement. Depending on the business, company, policies and stakeholders involved, you will need approval from any relevant parties..
- Execution
This stage should not be too difficult. After all the parties have come to a consensus and the contract has been approved, it is now time to make it official. There may be a number of factors that may get in the way of the smooth flow of this stage. Such may be time constraints, where people involved are based in different time zones. Getting a physical signature may at times be tricky. Doing it through email may not also be the best option available. This is the part where you will need to incorporate an electronic signature. It will make the execution faster and allow all relevant parties to sign without pressure.
- Stay updated on amendments and revisions
Contract management does not end once the contract is signed. In the long run, it is subject to amends and changes. You will be required to keep track of these changes. It may be tasking but there are various platforms that you can bring on board to facilitate this stage. Also, ensure that all parties involved are also kept aware of any changes that are made.
- Conduct audits
Most people may be compelled to think that contract management ends once all the paperwork has been settled. This is a misled notion. You will need to know whether the parties have been able to keep their obligatory end of the agreements. Keep a close eye on renewals and set reminders if need be. If the other parties are not updated, you might want to keep them in the know. Such moves will send a strong message of your reliability, which will allow you to keep building trust between the relevant parties
Managing your business contracts is important. It can come in handy when you are working towards creating business relationships. Following the contract management lifecycle t is essential in that it will be on the radar of risks and issues concerning both compliance and goals that were created in the initial contract.