Contracts serve as the foundation for agreements, partnerships, and transactions, making effective contract management crucial for business success.
However, many organisations fall victim to common contract management mistakes, leading to financial losses, legal disputes, and damaged relationships.
By understanding potential mistakes and how contract management software can be leveraged to avoid them, businesses can optimise their processes, enhance efficiency, and drive better outcomes.
Common Contract Management Mistakes
1. Poor Contract Visibility
Poor contract visibility occurs when businesses lack a centralised, secure location to store their agreements. Instead, they opt for Microsoft Excel, Sharepoint, Google Drive, emails or a combination of programmes.
This approach may work for a short while but using fragmented approaches in the long term will result in:
- Teams being overwhelmed by repetitive, low-value and administrative tasks
- A lack of version control leading to decision-making based on inaccurate data
- Documentation expiring and contracts renewing without anyone’s knowledge
- Poor communication between stakeholders, vendors and colleagues.
provides a centralised repository for agreements, offering total visibility into their status, key dates, and obligations."
It also provides robust control mechanisms, such as version history and audit trails. Being able to see every agreement, along with every version, allows stakeholders to make fully informed business decisions.
Preparing for audits, helping a colleague and answering questions from a third party are so much easier when you can easily access the up-to-date information you need.
2. Ineffective tracking of key dates
Ineffective contract tracking is often the result of manual methods which require stakeholders to track dates by relying on spreadsheets or even physical calendars.
Manual approaches typically involve inputting each contract's important dates and details manually, such as renewal dates, termination clauses, and payment deadlines.
Though seemingly straightforward, these processes are fraught with potential errors and inefficiencies.
Despite the best efforts and meticulousness, individuals are prone to mistakes, especially when handling high volumes of incoming contracts."
A missed deadline or overlooked clause can have significant financial and legal repercussions, potentially leading to expired contracts, unfulfilled obligations, or costly breaches.
Manually tracking information means there are contract management mistakes waiting to happen."
Contract management software automates the process of capturing key dates, clauses, and commitments, significantly reducing the risk of human error.
ContractNow uses an AI Extract engine to convert PDF versions of contracts into digital records and provide reminders and alerts for upcoming key dates.
This helps businesses to remain proactive rather than reactive, transforming contract tracking from a purely administrative activity into a strategic one."
Automated tracking and notification systems ensure that businesses can stay on top of their contractual commitments, reducing the likelihood of missed opportunities, unwanted contract renewals or non-compliance.
3. Inadequate Contract Review and Analysis
Traditional methods of contract analysis have Legal teams and their colleagues sifting through potentially hundreds of pages of documents to find information.
Rushing through the review and analysis process is a common mistake that can lead to unfavourable outcomes.
Yet making this mistake is understandable when businesses are under-resourced, there’s a high volume of incoming contracts and manual methods are used that make the task feel unbearable.
Allocating sufficient time and resources for contract analysis is crucial to ensure your business can safeguard compliance, identify risks, and negotiate favourable terms. By failing to review the contract thoroughly, your business loses the element of control.
Your business should leverage contract management software to automate the review and analysis process through Global Search technology.
The repository becomes completely searchable. Simply type in a keyword or phrase, and ContractNow will quickly find all the contracts containing that particular information.
Your business will be able to quickly identify which contracts have a particular liability clause or which agreements are governed by changing regulations. Being able to find this information easily allows your business to make important changes.
Wrap Up
Three common pitfalls - poor contract visibility, ineffective tracking of key dates, and inadequate contract review and analysis - can lead to significant risks, from missed contract renewals to unexpected issues and legal disputes.
With the right software, contract management mistakes can be avoided. But your business needs to be willing to modernise beyond its manual approaches.
Investing in and leveraging software is, therefore, not just about avoiding common contract management mistakes. It's about transforming the process from a purely administrative task into a strategic function that can drive value and contribute to business growth.
If you're ready to start managing your contracts more effectively, contact us today.
