Managing contracts is an on-going process that requires intensive monitoring and control. The challenges faced by contract managers today greatly differ from the issues of the past. The onset of the pandemic changed the business scenarios forever, which has brought an array of challenges for the contract management sector. We have compiled the current challenges that impede the contract operations.
The pandemic halted business operations across industry verticals, thereby inducing force majeure in contracts. Many businesses had to stop meeting the terms and conditions of contracts, thereby involuntarily violating it. Many companies did not have any particular clauses that considered the event of unexpected events. When the vast majority of businesses had to shut down temporarily or change their business pattern, contracts had to be restructured to accommodate such changes. Since the contract parties cannot invoke charges for violations because of the pandemic, amendments had to be made quickly. Making amendments to the contracts require the consent of the management, after which the contract manager will be required to create the addendum.
Contract management software enables the users to access documents remotely without jeopardizing the security of the sensitive information. If there’s a change or addition that is required to be made immediately, the contract manager can create an addendum remotely and get it approved, thereby bringing the changes in terms and conditions into effect quickly.
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Control Contract Risks
Contracts have become an integral part of businesses, which have financial implications. There are several risks that are associated with contracts and it is the duty of the contract manager to be abreast of the risks and control them effectively. The biggest risk regarding contracts is the loss or theft of contract information. While some contracts are basic and do not possess information of great importance, a few others might be of high priority, that requires extensive monitoring. At times having a large contract management team increases the risk of managing contracts since the sensitive information in the contract documents will be available to everyone within the team.
The contract lifecycle management software system possesses a fail-proof security system that enables the management to control the contract risks to a greater extent. The contract manager can assign levels within the repository, thereby decreasing the risk by providing access to authorised personnel. Security of information can be efficiently imposed at a micro-level, where a part of a document can be withheld to unauthorized team members, while they work on another aspect of the contract.
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A challenge faced by a vast majority of non-software users during their remote contract business operations is the knowledge gap in using the existing applications efficiently or the inability to configure the workings of software independently. Since the pandemic caused a sudden shut down of offices, the contract team members didn’t get the opportunity to be comprehensively educated in accessing a complex software application. This created a huge backlogs in contract operations.
Dedicated contract management software overcomes this challenge since the contract lifecycle management tools are easier to access. The user interface is designed to allow the contract team members to navigate the application with minimum technical knowledge. It is simple to access the remote contract management software and any minor glitches can be addressed quickly with IT support.
More than 50% of companies have said to incur losses on a regular basis because of deadline mismanagement. Managing deadlines is more than just adding alerts for individual contracts. Contracts are usually fixed for a period after which it either needs to be renewed or cancelled based on its performance during the lifecycle. When there are several contracts to manage, it often gets lost in the document load, thereby costing the company.
The best practice here is to fix alerts for contracts on a regular interval that allows the contract managers to evaluate the contract leading up to it’s expiry. The contract manager can further tag the relevant stakeholder to help them evaluate the progress of the contract and make informed decisions regarding the contracts.
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The contract tools have simplified the contract management process by offering smart solutions. With contract management software, the team can overcome challenges and ensure seamless operations of contract affairs.DocuCollab is a leading provider of contract management solutions. Click here to know more.