Contract lifecycle. Contract Management. Management and Organization of Documents and Contracts. Administration and Management of Legal Information. Legal Department. Lawyers. Administration. Financial Management.
The contract lifecycle: benefits for your company’s management. Contract management or contract administration goes beyond coordinating deadlines and expirations. It is a powerful resource for business management.
Whose contracts are in a company?
In Brazil, it is common for the word “contract” to refer to the lawyer, the legal department manager, or the professional who controls this type of management. However, as a company matures, we see that the significant volume of work related to contract management can be segmented and divided among various areas if the company has software to assist in this organization and standardization of documents.
What is the importance of a contract for my company?
Commercial and professional relationships, whether maintained with clients, suppliers, partners, or professionals, are relationships of trust, based on word and good faith, and this will not change. So, why should we insert a piece of paper if everything is going well?
The first perception is the security that what was agreed upon is written, and what is written can be proven, if necessary.
Of course, the intention is that the agreed-upon business exists and remains without major setbacks, but there is nothing like putting everything that was agreed upon in writing.
This happens because in Brazil, everything that is written has a different value, whether due to formality and the need for everyone involved to consider it important and to be fulfilled, or in the case of requiring in court any unfulfilled situation.
The second concerns the risk you intend to take for a particular operation or business. There is no way to be entirely free of risks, but it is important to measure and describe them correctly on a piece of paper.
In this post, we will show how any company, of any segment and size, can have a contract management structure and conduct the lifecycle of a contract simply and without many complications.
It is common in Brazil for the word “contract” to refer to the lawyer, the legal department manager, or the professional who controls this type of management.
But what is the contract lifecycle?
The contract lifecycle is a free translation of a phrase from the English language, widely known and spoken, especially in the United States: Contract Lifecycle Management.
In countries whose legal and social culture is greatly supported by good faith and customs, the ease and reduction of bureaucracy contribute to non-lawyer professionals being able to and being interested in leading contract management departments that are not linked to a legal department, for example.
It is extremely common for a company’s procurement department to have its contract templates, called Templates, which are developed and used for the company’s business, and, if necessary, receive some legal guidance on the terms and what will happen if a certain phrase, word, or interpretation may generate some kind of risk.
Manager of the Contract Lifecycle is directly linked to the operational process, which varies according to each company but basically has the following structure:
Request
This is when a company professional requests the document from the software. Depending on the company’s culture, the professional fills in some information and either receives a ready-made contract template or the request is forwarded to the contract management department or legal department.
Template and Customization
Depending on the business circumstances, the template may not be sufficient because the business has specific details. In this case, contract management can adapt the template with the business conditions to provide the necessary security and detail for the involved parties to feel secure and agreed upon the conditions.
Negotiation and Review
This is the phase where the involved parties receive a preliminary version, “draft,” or “draft,” to identify if everything agreed upon in the document is contained in it. This phase also consists of reviews, comments that are typed at the edge of the document, and forwarded via email. As versions are modified, new files are named with the latest change until everyone is confident.
Signatures
This is the moment when the involved parties sign the agreement they have agreed upon. These signatures are currently conducted electronically due to cost reduction and ease among the parties involved. In Brazil, electronic signatures are widely accepted, with or without digital certification, subject to compliance with certain requirements, which usually all digital signature platforms have.
Archiving
Archiving is nothing more than storing the file containing the electronic signatures and the document that was the subject of these signatures in a cloud and within software so that, if necessary, the parties involved can consult and take action.
Administration
Administration is the monitoring of the business (contract) that has been entered into between the parties. This type of administration is very common for contract management areas, especially in those where the provision of services is continuous, i.e., providers who have a long-term relationship with the company and who must fulfill obligations monthly in exchange for receiving values. It is true that contracts involving the acquisition of inputs, raw materials, and products are subject to contractual administration by contract management, especially to observe rules related to billing and release of values to the parties involved.
Renewal and Renegotiation
Refers to the subsequent moment when the contract manager, while monitoring and administering the negotiation, identifies the proximity of expiration and initiates a phase to renew and renegotiate a new business cycle with the parties involved. It is an important phase that requires a lot of attention to ensure the expiration of deadlines and conditions.
Is Contract Management only for large companies?
No. It’s a company thing. When you start organizing your documents and the business contained in them, it is undeniable that your experience as an entrepreneur will be much better because you will have control of the information at any time. Not always does the word “contract” mean a piece of paper with this name. There are many other documents that do not have the name of the contract but contain the business conditions, terms, how it should be done, delivered, produced, among other issues that you negotiated and that do not have a contract name and that are inserted into another document.
The simplest example is commercial proposals. Often, commercial proposals not only present the name, value, description of the service or product, delivery time, and price. They establish the preconditions before the formalization of a contract or even insert small clauses (text excerpts) to ensure the conditions of that business being celebrated.
That’s why contract management is so important because all documents written by your company become reviewable and suitable to follow a predetermined flow to ensure that no document, whether it has a contract name or not, is signed without your validation and authorization.
Do I need a lawyer to have contract management?
Of course not. Although it is prudent for you to have a lawyer you trust to prepare documents tailored to your interests, you or someone you trust can be responsible for monitoring the phases involving negotiation, from requesting a contract to archiving and administration.
Anyone can draft and sign a contract, although it is prudent to consult a lawyer. However, if you are very accustomed to your business and understand that you have the ability to foresee all risks on a piece of paper, you can draft your documents yourself.
On the other hand, you can acquire a few hours of consulting from a lawyer to prepare standard documents “Templates” especially in those negotiations where you present a contract/document model to the other party and the conditions are not negotiable.
This will ensure that you have a faster pace than competitors and will offer great efficiency and benefit to your company.
What are the disadvantages of not having contract management?
The lack of clear rules and processes in a company affects its productivity and profit. When you do not have contract management in your company, you usually face situations such as:
Departments hire suppliers, documents are not standardized, payments and terms do not suit your cash flow and business strategy;
Difficulty in controlling the conditions under which your partner, department, or professionals act towards third parties, hindering a central view of the company;
Delay in completing deals due to the absence of operational processes and controls through emails;
Deadlines and terms forgotten by those responsible and difficulty in consulting through spreadsheets;
Difficulty in measuring the productivity of professionals involved because it is not possible to identify the time and effort spent on control activities.
Tips for creating contract management in your company
No matter the size of your company, management is essential to avoid waste and continue growth. Here are some tips to start the structuring process, even if you do not have a legal department.
Centralize Requests
Find a way to centralize contract requests in one place. You can even offer that the request be made through various forms such as email, forms on the website, WhatsApp, Microsoft Teams, etc., but ensure that all these requests will be concentrated in a single channel for control and administration.
Control Templates
Define ready-made templates to be used in your main negotiations, in those that you routinely perform. Examples include employment contracts, purchase and sale contracts, lease contracts, service provision contracts, commercial proposals, purchase slips, invoicing, budgets, among other models.
Deadlines and Processes
Adjust in your company what deadlines professionals will have to prepare, review, modify, sign the documents and templates, or if they need customization, what the established deadline is. It is important to define the processes by identifying what the most common process is, creating it, and then establishing exceptions as you identify the need.
Responsibilities
Identify who will be responsible for releasing the template, document review, signers, contract or document administrators in your company.
Signing Method
Define in the document itself and in the internal rules of your company how the signing method will be, if by hand or digital. Make sure to use electronic signature companies that have certificates from the Brazilian government for the validity of signatures.
Organize and Administer
Define who is responsible for storing, storing electronic files, and who will manage, consult them in case of doubt or take action. This type of organization can take place in an appropriate location and with sufficient security to prevent invasions and loss of information. Make sure you make copies if administration occurs outside a certified technological environment.
Monitor Stages
Keep in mind that the contract lifecycle consists of stages and that it is the function of a manager to identify any barriers and problems in the stages and take steps to ensure that the process flows naturally and without interruptions. Make sure you can control it easily and without investing too much time.
Choose Software
You can manage contracts, commercial proposals, delivery documents, or documents from your company only through spreadsheets
Contract Lifecycle: Benefits for Your Company Management
Contract management or contract handling goes beyond coordinating deadlines and expirations. It is a powerful resource for business management.
Who owns the contracts in a company?
Although the word “contract” commonly refers to the legal department or specific professionals, with business maturity, we realize that the significant volume of work related to contract management can be segmented among various areas, especially with the aid of software for document organization and standardization.
What is the importance of a contract for my company?
Contracts form the basis of commercial, professional, and trust relationships with clients, suppliers, partners, and professionals. They provide security, documentation, and establish agreed terms and conditions.
What is the lifecycle of a contract?
The contract lifecycle is the trajectory from its request to its archiving and eventual renewal or renegotiation. It involves several stages, such as request, customization, negotiation, signatures, archiving, administration, renewal, and renegotiation.
Is Contract Management only for large companies?
No. It is essential for any company, regardless of size. Organizing documents and business improves the business experience by providing control and accessibility to information at all times.
Do I need a lawyer to have contract management?
Not necessarily. Although it is prudent to consult a lawyer for personalized documents, anyone qualified can follow the stages of a contract, from its request to its administration and archiving.
What are the disadvantages of not having contract management?
The lack of clear rules and processes affects the productivity and profitability of the company. The absence of contract management can result in non-standardized contracts, difficulty in control, delays in negotiations, forgotten deadlines, and difficulties in measuring productivity.
Tips for creating contract management in your company:
- Centralize contract requests.
- Control standard templates.
- Establish deadlines and processes.
- Designate responsible parties.
- Define signing methods.
- Organize and manage files.
- Track all stages of the lifecycle.
What are the benefits of using ENSPACE for Contract Management?
ENSPACE offers flexibility and resources to optimize time in any company, large or small. It allows customization, process automation, real-time communication, email integration, document control, electronic signatures, and much more, without the worry of additional licenses for users.
Consult with us on how ENSPACE can be a valuable ally for contract management and document lifecycle in your company.
