Test Yourself: Five Questions about Contract Management

Well-managed contract base is like a good set of tools, easily available when you need them.

After the refreshing summer break, the month of August feels like a new beginning. The batteries are fully charged and our mind is open to new ideas. As we return to work, many of us are cleaning ours desks, going through the mountain of emails in our inboxes constantly dreading to find out what we have missed and preparing to-do sheets for the month ahead. The same as ever!

But this time let’s begin things a bit differently, I have a suggestion for you – add one more item to your task list (before you fret, hear me out) take a quick test on your organization’s contract management status. It is rather easy; ask yourself and your colleagues these five simple questions:

1. Do we have all the necessary contract information we need in our day to day operations, easily available for both our business units and administration team?

Think about it! Wouldn’t it be wonderful that every time you need to review a contract you or someone else in your office doesn’t need to go through pile after pile of folders or sift through the never ending digital paper trail in your company’s Dropbox, finally reaching you after an hour only to be missing critical review points which are on e-mail? Worst of all this contract will more often than not get lost again once you are done with it. We call this the ‘bad circle’ of contract information. So ask yourself and your colleagues is your company still stuck in this ‘bad circle of contract information’?

2. When we face an audit/Due Diligence, how many resources do we end up allocating in order for the exercise to go off smoothly?

For all of us managers out there, ‘Audit days’ are often the most stressful in the year. Often it is a week-long labor intensive process (sometimes even more) which affects not only our work flow but also puts a strain on our personal lives. In case your company falls into the above mentioned category collecting all the information for a due diligence process is undoubtedly one of your worst nightmares as the entire workspace is high jacked in order to complete this one process. As a result the productivity of the company falls dramatically.

3. Have we forgotten way too many important dates lately?

Unless you have a photogenic memory, it’s difficult to remember all the important dates of the contracts you have signed or have worked upon previously. Sure, we have our task managers and other such applications to take care of such dates but they are limited by our own actions. My personal view on this is that it’s not only the important contracts we need to worry about but often the seemingly inconsequential contracts that can end up causing us a big financial loss and embarrassment.

4. Have we recently faced an embarrassing proposition of asking the other contract party to send us the copy of our mutual agreement?

If you have faced this awkward situation more than once than your company quiet literally is playing with fire. Asking fellow parties for a copy of your mutual agreements is not only a very risky proposition but also sets a terrible impression of the company with your partners. It is not wise for any company to be in this space!

5. In the event, when an employee leaves our organization how do we cope with re-allocating the contract related responsibilities that she/he had been handling?

Sadly, a common occurrence in companies worldwide, the more networked an ex employee is within the company’s contract jungle the more distressed his predecessor and fellow colleagues are going to be when covering his seemingly never ending paper trail. All successful organizations have invested considerable amount of money in developing systems to decrypt the company paper trail from the influence of ex employees. Documenting responsibilities and roles of all employees (including past employees) and timely informing them to all stakeholders is the hallmark of good corporate governance.

Did you feel a bit stressed while answering these questions? If you answered ‘yes’ to any of these questions, it’s recommended that you carefully study the contract situation in your organization. In case you answered ‘yes’ to more than one question then, my friend, ‘the shit has hit the fan’ and you probably need to rejig your contract management soon. Finally, if you answered ‘No’ to all the above questions then ‘kudos’ to you and your organization for having a firm grip on your contract situation (you are a rare breed).

Well-managed contract base and easily available contract information not only protects your organization against unwarranted risks but also frees up your time so that you can spend time on activities that really matter instead of collecting documents or stressing over lost information and opportunities. But perhaps the biggest benefit is your improved productivity or ‘personal ROI’.

We at Sopima can help you put your contracts and work life back in order. Try Sopima and bring your contracts to life!