Contract Execution Process: Everything You Need to Know
Contract execution process refers to the activities involved in implementing the terms of a contract.3 min read
2. What Happens When Contracts Are Stored in Disparate Systems?
3. What Is the Consequence of Having No Standard Process for Managing Renewals and Expirations?
4. Are Contract Performance Measurements Needed?
5. What Is the Consequence of Having No Well-Organized and Well-Managed Contract Management Process After Contracts Have Been Signed?
6. Is a Contract Lifecycle Management (CLM) Software Important?
7. Advantages of Using a Central Contracting Tool
8. Advantages of CLM Platforms
Contract execution process refers to the activities involved in implementing the terms of a contract. Signing a contract is not the end of the agreement, what follows is usually far more important for its success.
What Happens after a Contract Is Executed?
While much effort is required to prepare a contract, the execution of the contract is the crucial work to be done. The contract is merely an agreement between two parties who are trying to protect their interests. Despite the tremendous amount of resources companies dedicate to drafting contracts, it comes as a shock to see many organizations handle the post-execution process of their contracts with levity.
What Happens When Contracts Are Stored in Disparate Systems?
Several problems can arise if the post-execution of the contract is not handled properly. These problems include fragmented visibility, where the storing of contracts in disparate systems reduces visibility. This can result in:
- Loss of opportunities.
- Revenue Loss.
- Compliance problems, among others.
What Is the Consequence of Having No Standard Process for Managing Renewals and Expirations?
The result is a lack of consistent process for the management of expirations and renewals of contracts. Often, lack of visibility of contracts and their expiry and renewal date results in the contracts being renewed or expiring automatically without the terms being renegotiated. If there is no standard process for managing the relevant dates of contracts and the necessary actions that need to be taken, it is often too late to act when the dates are due.
Are Contract Performance Measurements Needed?
Lack of contract performance measurements makes it difficult for companies to identify the benefits, opportunities, and risks facing their contracts. You need to have current information about the performance of your contracts, how they are helping you reach your targets or otherwise, and a set of standards against which you compare them relative to your targets.
What Is the Consequence of Having No Well-Organized and Well-Managed Contract Management Process After Contracts Have Been Signed?
Some of the consequences of not having a well-coordinated and standard contract management process after execution include increased operating costs, reduced productivity and lower efficiency.
Is a Contract Lifecycle Management (CLM) Software Important?
Yes. A contract lifecycle management software package can significantly enhance the post-execution success of a contract, although the performance and overall success of the agreement depend on the conduct of the parties involved.
Advantages of Using a Central Contracting Tool
A central contracting tool can provide effective solutions to many issues that hinder the success of contract post-execution as they can increase visibility and greater control over an organization's contracts.
Advantages of CLM Platforms
CLMs offer some of the following benefits:
- Provide greater contract visibility so that decision makers can have access to relevant information as at when due, thus lowering the risk of making wrong decisions.
- Promotes effective collaboration among stakeholders by providing a standard management process as well as relevant clauses, terms, and conditions of contracts.
- Prevents misunderstandings by keeping everybody updated on current issues. Offers a seamless post-execution contract handoff, especially when hosted on a cloud-based system.
- Provides regular updates and notices for key stakeholders on specific important details and actions such as expiry and renewal dates, thus reducing the likelihood of missed deadlines.
- CLM software provides critical information about your organization's contracts such as risk assessment of individual and contract portfolios, strategies for adding value, tracking contract performance and other insights which promote excellent contract management post-execution.
Signing the contract is not the end of the contracting process, rather, it is the start. With an excellent contract management platform, not only will your post-execution be well managed, but your organization will also have access to vital information and insights that can enhance your company's decision-making process
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