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MANAGEMENT CHAT
Rafael Correa da Costa contato@agroflysistemas.com.br
Nine Steps to Why It Matters
The life cycle of each contract is formed by the phases of pre-contracting, contracting and post-contracting and different stages for each of these.
B 22 | agairupdate.com
Contract management is the set of techniques, processes and functions that allow you to manage contracts in a company, from the preparation of the first proposal to the execution. Every organization needs to deal with contracts, which are basically agreements signed between two or more individuals or legal entities that establish rights and commitments between the parties. In the case of a company that provides recurring services, contracts are closed directly with customers, but it is also necessary to hire suppliers, partners and other entities. Therefore, every business needs to apply contract management to ensure that agreements are fulfilled, services are provided correctly and deadlines are obeyed. This management should cover each of the stages of the life cycle of a contract, ranging from request to termination or renewal. It is possible to keep hiring up to date, avoid errors and optimize business processes. Objectives of contract management are to ensure compliance with the terms and clauses of all contracts, streamline contractual procedures in the company, monitor all stages of the life cycle of contracts, manage the storage and history of contracts, control expiration dates, renewing contracts (including, to optimize sales strategies), identifying the need for addenda and contractual amendments and promoting communication between the parties. During all phases of the contract, the responsible manager must ensure that the signed conditions are fulfilled and/or modified when necessary, avoiding errors, inconveniences, delays and other problems that may harm the company’s relationship with its partners and customers. Contract management is essential for companies of all sizes that deal with this type of instrument, as it ensures that the agreements are fulfilled and both parties are satisfied with the negotiation. For service providers, a well-managed contract
means a satisfied customer and possible loyalty, in addition to the guarantee of recurring revenue, in the case of services provided continuously. In addition, contract management is an essential part of strategic planning, as it allows the company to act at each stage of contracting to expand business opportunities and improve service performance. The greater the flow of company contracts, the more important this management work is, as missed deadlines and inconsistencies with clauses are common problems when there are many documents to control. The life cycle of each contract is formed by the phases of pre-contracting, contracting and postcontracting and different stages for each of these. The first stage of a contract’s life cycle is planning, which determines the object of the agreement and its conditions. The document can be created at the request of a customer, the company’s purchasing department, a supplier, or any other situation that requires a written business agreement. In this beginning, the clauses, objectives, risks, sanctions, rights and obligations of the parties are defined, as well as the deadlines. In larger companies, it is common to have a position dedicated to collecting information and drafting contracts. In the smaller ones, this task can be delegated to the legal, financial, commercial or the entrepreneur himself. The second stage with all the conditions defined, the contract begins to be drawn up at the writing stage. The company can use a template or use the legal department (or external legal services) to write the document from scratch. When the flow of contracts is high, it is possible to reproduce the same models and use patterns to speed up the creation. Anyway, this initial text is just a draft, as the contract must still pass approval and review to be validated. The third stage is the negotiation stage where ➤
