10 Key Elements for CLM #6 – Contract Commitment
Our blog series looking at the 10 elements essential to a rockin’ CLM system is at the halfway point. We’ve covered the basics – repository
, contract authoring, clause library, redlining, negotiation and review and then most recently, signature. Now that the contract is signed, it’s time to focus on objectives of the contract and what matters most – commitment tracking and milestone management.
The reality is that a contract, much like a wedding, is just the beginning. The really important stuff comes after the two parties are bound by their contractual commitments. Making sure the content of the agreement is executed in the way both parties intended, makes the contract a living and a very powerful document. There are potentially serious consequences that can follow when contracts are not executed properly, including financial penalties, unintended renewals, lost revenues, and unnecessary risk exposure.
Milestone management is essential to the contract once it has gone live (signed). Shared repositories, manual processes, or basic systems do not proactively track upcoming key events on active agreements to keep the responsible parties informed. Let’s face it, people are busy and it’s all too easy to overlook an important deliverable in a contract that was signed a while ago. A contract management system that only focuses on contract authoring, editing, and approvals is short-sighted. Contracts are documents and data that must be actively managed. The signature is just the beginning of the contract lifecycle. Crucial milestones and obligations must be adhered to long after contract signature. The long-term benefits of a contract will amount to nothing if obligations are forgotten or ignored.
Renewal and obligation tracking is a key component of effectively managing the lifecycle of a contract. Malbek Contrax ensures that key events, such as price increases, payment milestones, and other deliverables, are all followed with proactive reminders. It also triggers appropriate notifications for expiration, renewal, notices and other key events. This arms companies with control over contracts so that they are not caught off-guard or hit with unexpected consequences, like unwanted auto-renewals. Missed obligations or opportunities end up costing a significant amount, impacting the company’s bottom line.
We’ve heard so many horror stories from industry professionals who have faced the real-life consequences of not effectively managing the commitments within their contracts. Anyone who has signed up for a paid app on their phone and then forgot about the auto-renewal a year later can relate to how easy it is to forget about contract terms. If this issue is impacting you in your business, reach out and request a demo. And in the meantime, check out the rest of the eBook on The 10 Key Elements You Must Have in Your Contract Management Solution.