Who’s Doing Your Contract Management?July 4, 2017 . .
It is estimated that 80 percent of business-to-business transactions are performed under legally binding contracts. At a minimum, each would likely have a set of terms and conditions, service and supply level agreements, and commitments etc. It is also likely that contract management falls by the way side once the contract has been signed. Most contracts won’t be pulled out of the filing cabinet unless there is a problem or the thing has expired and your invoices are not the same as they were. When these things happen, everyone scrambles.
If you were to pull out that contract document today what are the odds of finding a summary sheet of the agreed to service or supply levels, let alone dates and minutes of meetings with issues and action plans. I have seen millions left on the table because no one picked up the contract and understood what needed to be managed and how. Great intentions and profits are lost, relationships are soured, finger pointing and disruption to the business flow occur and it all ends up costing more money to solve what should not have been a problem in the first place.
Organizations are always looking for ways to improve their bottom line, reduce costs, maintain competitiveness and set themselves apart. One way to accomplish this is ensuring that your organization has an established contract management process. This would include a ‘contract owners and owner succession procedures’ should the assigned owner leave. Depending on how reliant your company is on third party providers, you may want to consider a Contract Management Office. Seems like a no-brainer…you are paying others to perform a service for you so therefore you need to manage them.
Good Contract Management pays dividends. Ongoing, effective communications are critical. It’s important not to let repetitive problems or major opportunities for improvement slip by without discussion. Contracts are a two-way street and both parties need to be engaged on a regular basis to take advantage of opportunities to improve.
There is a world of opportunity that is sitting right under your nose and contract management is just one of many that the good people at Incrementa can help you with.
Chris is dedicated to helping businesses grow and flourish by unlocking the power and strengths within them. He is a dynamic operations expert with over 35 years of experience in a diverse range of business environments. For more information on Chris, check out LinkedIn, Incrementa Website and Twitter.