Every business agreements should be finalized with a contract and to reduce any risks in those agreements and create strategic relationships, contracts should be managed effectively and properly. Hence the significance of contract management is increasing on a day-to-day basis as businesses try towards increasing productivity without increasing their employee numbers.

Contract management is the process of managing contract �it�s creation, modification, execution and analysis to maximize operational and financial performance at an organization, all while reducing financial risk. Contract management has always been a time consuming element in a corporate firm and hence managers especially for this purpose are being hired by many companies[1]. This helps them to maintain an effective and automated contract management.

When two companies wish to do business each other, a contract is the one that specifies the activities entered into by both organizations and the terms through which they will both fulfill their parts of the agreement. Revenues and expenses are hence directly affected by contracts in a larger manner.

The management generally comprises of three stages- pre-award stage, the early stage, is all the work that takes place prior to a contract being given to someone, whether it be a business or an employee. The middle stage is when the process is awarded. This includes all the paperwork to make the agreement final. Third, there's the post-award stage. This is where a lot of contract management and maintenance comes is required[2].

The stages of contract lifecycle management
Stage 1- Prior to contract preparation, identifying the business deal�s goals, needs and setting expectations to foresee risk is crucial. Contracts are legally binding documents that should be approached with due attention. It�s important to be organized and prepared with the right resources.

Properly identifying the needs, reasons, and setting goals that require a contract makes any decisions down the line much easier. Contracts ought to seek to define and mitigate risk in a relationship, looking ahead to any potential scenarios that could occur over the lifetime of the document and accounting for them in the contract. For example, the terms of agreement within a contract should address what happens if the client files for bankruptcy, goes out of business, or sells the company, along with any other contingencies that may arise.

So once goals are identified and expectations are set, the next step is to draft it.

Stage 2- A preset template would make things easier. Using such templates drafted by the legal team might help to ensure that all the information is up-to-date and all required and most significant clauses and terms are automatically included[3]. Any additions, depending on the nature of each contract can be made to make it more effective and risk free.

Ambiguities need to be completely avoided and each word should be given due caution and care. Even the punctuation marks should be paid attention to since any ambiguity leaves contracts for interpretation.

Negotiations are always an elementary to contracts.
Stage 3- Negotiating the contracts is the third stage and it should be done with transparency and trust. Anticipating and analyzing the other party�s needs before the conversation simplifies the process and creates a strong foundation for a lasting relationship.

Stage 4- Approvals or Audit from the managers might be necessary. After negotiating the agreement and both parties and both parties agree, procedure for manager approvals might be needed in some companies.

Stage 5- Making the document official is the next step. Signing by both the parties should be simple, without any discrepancies, to execute the contract.

Stage 6- Revisions and amendments should be properly done since they are a part of the lifecycle of a contract and which keeps it moving ahead of the changes

Stage 7- Regular audits should be conducted in order to ensure whether the obligations are performed by both the parties. It is important to determine that both are complying with the terms and conditions of the agreement. Missed renewals and audits mean lost opportunities to continue a relationship, and most importantly for a company, lost revenue. Being aware and making contact well before the renewal time shows reliability and care for the relationship, and will continue to build trust and loyalty.

A few elements of successful contract management
It isn't enough that an organization has professionals in place to handle contract management. Employees must be augmented with the presence of processes and software companions to satisfy increasing compliance and analytical needs. When a contract management strategy is successfully implemented, organizations can expect to see:

• The business starts to see it expected returns.
• The supplier is cooperative and responsive to the organization's needs.
• There are less contract related disputes.
• Both parties are well satisfied with the services by them.

The foundation for contract management relies on the implementation of successful post-award and upstream activities. During the pre-award stage, employees should focus on the reason for establishing the contract and if the supplier can fulfill the terms of the agreement.

Additional consideration is required to understand how the contract will work once awarded. Avoiding unwanted surprises require careful research and clarity of purpose in the actual contract.

Contract management often requires a level of flexibility for both parties involved and a willingness to adapt contract terms to reflect any changing circumstances. Problems are usually inevitable, which means organizations must be prepared for the unexpected and be able to adjust contract terms when needed[4].

Benefits Of Contract Management

Let�s look at some of the significant benefits of contract management:

Aids Business Functioning

Efficient contract management will always help simplify how an organization functions � it structures business expectations, the mechanisms needed for their fulfillment and allows you to analyze how the organizational objectives meet. The insights from contract management can also help identify areas for revenue optimization and cost minimization.

Improves Functional Efficiency

Good contract management techniques involve the use of various software or tools that automate the process of managing contracts. By reducing manual efforts, it improves business efficiency and the scope of errors. The personnel can focus on more strategic aspects of contract management like evaluating contract performance, identifying areas for improvement, etc.

Improves Spend Visibility And Minimizes Maverick Spending

By structuring the engagement of an organization with its stakeholders, especially its suppliers, contract management simplifies transactional, and performance tracking. It increases spend visibility and improves the transparency of where exactly your money is going. Maverick spend is one of the critical issues that plague businesses, and higher spend visibility will help you curb undocumented expenditures. By increasing spend visibility; contract management can also help you identify higher cost savings opportunities for your organization.

Increases Visibility Of Suppliers

Suppliers are often considered as a crucial part of most business today as the majority of the organizations involve suppliers for the provision of goods/services for facilitating their performance. Contract management helps in tracking the suppliers, assessing their performance based on the criteria mentioned in the contracts, and evaluating supplier risk. Furthermore, it also acts as a mechanism for building long-term, collaborative relationships with the suppliers resulting in valuable synergies.

Enforces And Improves Compliance

Having a contract management system that dictates terms and conditions and procedures followed implements and enhances the level of compliance amongst the relevant stakeholders. Increase in compliance invariable helps in mitigating a large number of risks within the organization[5].

Conclusion
Contract management is indeed a time-consuming task, but if properly managed, can be one of the most lucrative areas that help with building business relationships and generating revenue. A contract lifecycle management platform simplifies contract management processes, providing the ability to manage and avoid risk and compliance issues through templates and approval workflows, streamline negotiations with online redlining, deliver more revenue and faster with online signatures, and more easily manage documents after their signed helping organizations grab opportunities that may otherwise have been missed. Many companies are turning to contract management platforms to reduce costs, mitigate risks, and increase profitability.

End-Notes:

1. Bennett Colin,� The Fundamentals of Contract Management� BUSINESS NEWS DAILY, August 13,2019 https://www.businessnewsdaily.com/4813-contract-management.html
2. ibid
3. The seven stages of contract management�CONCORD,https://www.concordnow.com/blog/7-stages-of-contract-management/
4. Bennett Colin,� The Fundamentals of Contract Management� BUSINESS NEWS DAILY, August 13,2019 https://www.businessnewsdaily.com/4813-contract-management.html
5. Ultimate Guide To Contract Management: Benefits & Best Practices�, ZYCUS https://www.zycus.com/blog/contract-management/contract-management-guide.html