Contract management encompasses the orchestration of contract creation, execution, and evaluation to optimize both operational and financial outcomes within an organization, all the while mitigating financial risks. As businesses face mounting pressure to curtail expenses and enhance overall performance, the intricacies of contract management emerge as a labor-intensive aspect of operations, underscoring the necessity for a robust and automated contract management platform.
Essentials of Contract Management
When two companies engage in business dealings, a contract delineates the terms of their agreement and outlines each party’s obligations. These agreements serve as legal instruments, holding all involved parties accountable to one another. Contract management extends beyond corporate partnerships to encompass the oversight of agreements with freelancers or employees.
However, contracts often feature complex legal jargon, making them daunting for entrepreneurs to navigate without legal expertise. This is where contract managers play a crucial role, adept at deciphering intricate documents and ensuring the solidity of agreements.
Outsourcing contract management to a dedicated professional offers entrepreneurs the advantage of focusing on core business operations rather than grappling with administrative tasks.
Stages of the Contract Management Process
Contract management involves a series of stages aimed at ensuring effective handling of contracts throughout their lifecycle. Here are the key stages:
Creation
- Initial requests: Identifying contracts and associated documents to serve the contract’s purpose.
- Authoring contracts: Utilizing automated contract management systems for streamlined contract drafting.
Collaboration
- Negotiating the contract: Comparing contract versions and addressing discrepancies to streamline negotiations.
Signing
- Approving the contract: Implementing tailored approval workflows to facilitate timely management approval.
- Execution of the contract: Utilizing electronic signatures and fax support to expedite the signature process.
Tracking
- Obligation management: Monitoring deliverables and contract value to ensure compliance and optimize performance.
- Revisions and amendments: Amending contracts as needed and maintaining comprehensive document records.
- Auditing and reporting: Conducting contract audits to assess compliance and identify potential issues.
Renewal
- Renewing contracts: Automating the identification of renewal opportunities and creating new contracts to avoid missed opportunities.
Throughout the contract lifecycle, contract managers must remain vigilant for changes or breaches, ensuring timely intervention to mitigate risks. Additionally, managing vendor performance and risk is crucial, necessitating adjustments to contracts as needed to uphold contractual obligations and maintain satisfaction for all parties involved.
Contract Management Software Explained
Contract management software offers an electronic solution to streamline contract-related processes. By organizing all contract paperwork within a centralized platform, these software suites simplify tasks such as signing, renewing, and resource allocation.
Integration with automated contract management services enhances efficiency by automating various aspects of contract management, saving significant time and adding value to a company’s operations.
Robert Powell, CEO and founder of the Rob Powell Biz Blog, highlights the primary function of contract management software, stating, “Contract management software stores key information about contracts relating to providers, commercial leases, and licensing agreements, aiming to streamline administrative tasks by creating a centralized and uniform record for each contract’s processes.”
The software facilitates easy monitoring of complex contracts, reducing reliance on manual paperwork. Additionally, it enables employees across multiple locations to access contracts conveniently from a centralized repository, enhancing collaboration and efficiency.
Who Utilizes Contract Management Software?
Contract management software is primarily utilized by departments responsible for creating, tracking, and executing contracts. Typically, this responsibility falls under the purview of the HR department, which oversees employment-related documentation. Additionally, managers involved in crucial processes may also engage with the software.
Given its integration capabilities with calendars and communication tools, HR departments can leverage the software’s robust features for managing contracts efficiently. Moreover, it facilitates collaboration by involving relevant managers and personnel in specific aspects of contract signing or negotiation.
Pro Tip: Many top HR software solutions offer built-in contract management tools. Explore our top picks to identify solutions that can enhance your document management workflows.
How to Pursue a Career as a Contract Manager
While not all universities offer specific degree programs in contract management, some institutions do provide relevant education in this field. Pursuing such education is one pathway to entering the profession, but there are alternative routes that can also lead to success in the industry. Business degrees, for instance, equip individuals with foundational knowledge and skills that are valuable in contract management.
According to Jared Weitz, founder and CEO of United Capital Source, obtaining a bachelor’s degree and gaining practical experience in the field are essential steps. Additionally, aspiring contract managers can seek certification through organizations like the National Contract Management Association (NCMA). A combination of education, credentials, and relevant experience is crucial for success in this role, along with strong communication, writing, organizational, and deadline management skills.
A background in law can also be advantageous in this career path, as legal knowledge is fundamental to effectively managing contracts and negotiations. Connecting with seasoned contract managers can provide valuable insights into the profession and help aspiring professionals navigate their career paths. Ultimately, while there is no fixed pathway to becoming a contract manager, acquiring business experience is key to entering and excelling in this field.
What is the Salary Range for Contract Managers?
Contract managers typically earn annual salaries ranging from $75,000 to $150,000, although actual figures can vary depending on factors such as geographical location and level of experience.
Moreover, contract managers have opportunities to advance to higher-level positions such as senior contract manager, contract director, or contract administrator, which often come with increased salaries.
Reducing Document Burden through Contract Management
Contract managers play a crucial role in overseeing the legal and financial aspects of contracts with businesses or employees. While hiring a contract manager may not be necessary for most small businesses, companies that frequently engage in contractual agreements can benefit greatly from their expertise.
If your business struggles to keep up with paperwork and formalize agreements in a timely manner, considering the services of a contract manager could be a wise decision.
With our services, you can effortlessly track your business’s financial activities, enabling you to make informed decisions and drive growth. Say goodbye to uncertainties about your business’s financial health and welcome clear, actionable insights that propel your business forward. Begin your journey with PVM Accounting today by requesting a complimentary accounting quote.
