Businesses rely on contract managers to mitigate risk, ensure compliance, and protect the business from operational inefficiencies associated with the contract management lifecycle.
It can be mind-boggling to think about the thousands (or hundreds of thousands) of contracts that govern a large company’s business operations. Effectively managing such an enormous volume of legal documents can be a challenge, and doing a poor job of it can be a costly mistake. In fact, a study by the International Association for Contract and Commercial Management (IACCM) suggests that inefficiencies in contract management can erode contract value by 9.2%. So exactly how does a business improve their contract management?
The answer is a combination of good contract managers and effective contract management software. Businesses must rely on the expertise of contract managers to handle the day-to-day tasks associated with the contract management lifecycle. Contract managers are responsible for streamlining the creation, negotiation, execution, compliance, storage, and renewals across all departments within an organization, and are often reliant on contract management software to facilitate the process.
What are the Day-to-Day Responsibilities of a Contract Manager?
Contract managers serve a liaison between all companies, departments, and employees involved in the execution of a new legal agreement. They're the central point of contact for all parties throughout the process, and at the end of the day, they’re the ones responsible for ensuring the timely execution, overall compliance, and safe storage of all contracts throughout the enterprise.
While the actual day-to-day responsibilities of a contract manager can vary greatly depending on the industry and the size of the business, below is a high-level list of the standard tasks associated with a contract manager role:
Gathering business requirements for new contracts.
Reviewing and sharing redlines between both parties, while managing draft versions.
Facilitating legal discussions around unresolved contract issues.
Directly negotiating pricing or insurance requirements.
Defining the approval chain and documenting approvals from each internal stakeholder.
Sending finalized contract out for signature.
Managing the contract library - securely storing, organizing, and retrieving all contracts.
Tracking auto renewal and expiration dates.
Ensuring key compliance dates and conditions are observed.
What Skills Should a Contract Manager Have?
As a role that interfaces directly with many different departments, contract managers need to have a well-rounded set of skills. A working knowledge of business, finance, legal, sales, sourcing, and procurement can come in handy; however, there are also specific traits that can really enable individuals to excel in this position:
A contract manager needs to have a thorough understanding of their business and industry. As the first line of defense in the contract review process, contract managers must be able to quickly step into new fields and become experts on new products or services. They also must be fully aligned with the company’s expectations and principles.
Negotiating terms, leading others, and managing workflows all require excellent interpersonal skills. A contract manager needs to be influential, motivational, and likeable. They must be capable of communicating with everyone from sales reps to C-level executives, and they must be capable of delivering in high-pressure situations. A good sense of humor helps!
Attention to Detail
Contracts are not light-reading material, and anyone who has reviewed one knows that they require significant attention to detail. Contract managers must have the attention span, patience, and eye to thoroughly review full legal documents end-to-end and fully comprehend the terms stated in the agreement. Being able to catch mistakes or unfavorable terms is crucial.
Contract managers are not only responsible for new contracts, but they must also manage the renewal of existing contracts. This leads to a heavy workload that compounds each year. In order to successfully manage contracts without becoming overwhelmed, organizational skills are needed to juggle dozens, or even hundreds, of contracts all in various stages of the contract lifecycle. They must be able to quickly locate contracts, plan ahead of key dates, and keep negotiation and execution activities on schedule.
Contract negotiations can go on for months or even years, and when large amounts of money are on the line, emotions may get the best of various stakeholders involved in the process. Contract managers must have emotional intelligence and be able to act logically and reasonably. They may also face a significant amount of internal pressure to finalize contracts quickly, and often have to make quick decisions and balance risk management with speed to market.
When it comes to protecting a business from legal risk, contract managers are the first line of defense. Contract managers must fully comprehend the company’s risk appetite and ensure that it’s accurately reflected in all legal documents. Whether it’s securing final approvals or negotiating certain insurance requirements, or simply understanding the reputation of a vendor, contract managers must be capable of managing risk on behalf of the business.
How Can Contract Management Software Help?
No matter how skilled a contract manager is, there is only so much they can do without an effective contract management software (CMS). A good CMS can help companies to automate many manual processes - from versioning control, to search, storage and reporting, to e-signing. By using a good CMS, contract managers are able to increase the speed at which contracts are created, negotiated, and executed, which can result in greater operational efficiency, reduced expenses, and increased revenue.
Contract managers shouldn't be contract librarians either. Automated software solutions can help. Some CMS offer a secure-cloud-based contract repository equipped with advanced search capabilities and user permissions that will provide eligible employees the read-only ability to locate just their contracts in seconds, without exposing other contracts. Having contract managers manually storing or retrieving contracts is not a good or productive use of time.
Certain platforms also offer the ability to set recurring email or calendar reminders to help ensure contract managers are able to stay ahead of key contract dates and never miss an auto-renewal or expiration date. This can help your organization manage risk, and renegotiate unfavorable terms before it's too late.
CMS is also a powerful tool for helping contract managers to stay organized. Through customizable reporting and configurable dashboards, contract managers can leverage CMS to gain insights into spend, vendor management, and contract terms and dates. This not only helps contract managers stay on-task, but also provides transparency and visibility throughout the organization.
If you’re looking for a new, robust contract management platform to supplement your team of contract managers, check-out ContractSafe. Our robust contract platform can save your company money and make your contract manager's life a lot easier. Schedule a demo today.