Ruben “Rube” Goldberg was an American cartoonist, sculptor, author, engineer and inventor whose cartoons popularized how simple tasks could be executed in indirect, complicated and convoluted ways. Rube left his mortal coil in 1970, yet 50 years later, he continues to be synonymous with the ability to take something well understood and make it overly complicated. On the other end of the spectrum we have the K.I.S.S. principal, as in Keep It Simple Stupid, espoused by our armed forces as the best way to manage any processs. It all makes sense. The less complicated the item or process,the fewer the number of parts or steps and the more structured it is, and greater the likelihood of success. So what does this have to do with “Working Without a Contract Management Template”? Seems disconnected? Hardly. Let me tell you why.
You'll be Suprised to Learn
You might not realize it, and I continue to be astounded by this myself, but many companies, even those with hundreds of millions of dollars in annual revenue (and some with revenue in the $billions) subscribe to the Rube Goldberg process of managing their contracts. They do not have a structured process, contracts can’t be found because they are not centrally located and important dates and obligations are missed. To the uninitiated, contracts are those nefarious documents with confusing terms, a syntax all their own and legal weasel-words that confound and confuse. They are a nuisance. To the business owner, contacts are the life-blood of his or her business. They are the reason why prices are controlled as low as they are, why goods and services are delivered on time and upon which the jobs of millions of people depend. All across the globe, the world economy depends on two or more parties agreeing to how they will transact business, the terms, the pricing, the dates, the discounts, the penalties, the incentives.
The Big Picture
So what is a contract management template? It is actually a number of things. At a 50,000 foot level it is a template for the process of how contracts will be managed across the enterprise i.e. how they will be created, what they must contain, how they are reviewed, changed and approved, how and where they will be accessed, how obligations will be delivered, how they will be tracked, how they will be re-negotiated and how they will be renewed. It is also a template to legislate and impose “best practices” across the enterprise. Rather the lack of a contract template or a contract process template makes things unnecessarily complicated, unstructured and fraught with the potential for problems, lost opportunity and lost revenue.
What else is a contract management template used for? There are five areas that I will touch on briefly: contract knowledge base templates, contract structural templates, contract clause templates, contract approval templates, and contract reminder templates.
Company-to-company, even for companies in the same market space, contract language, requirements and business process can vary widely. No matter how you manage your business, your consistent, dependable execution assures that when a contract enters into your system, all the requisite attention, review and processing happens as it should. Contract management templates assure consistency and that nothing falls through the cracks. Contrract management templates allow you to personalize your unique business process, rather than causing you to fit your process into what soemone else deems important.
The Contract Knowledge Base Template. Contract knowledge base templates are used to define unique information that you wish to capture for each type of contract that you manage. As an example, a healthcare company might contract providers and want to know whether they service Medicare and Medicaid patients. They might also contract a cleaning service and equipment suppliers who have nothing to do with Medicare or Medicaid. For this reason it is incredibly important to be able to associate the unique database/knowledge base/term sheet/meta data, whatever you choose to call it, with the type of contracts you are issuing, accepting and managing.
The Contract Structural Template. Contract structural templates provide users with vetted template libraries, pre-approved by legal to meet the requirements of each contract type. These are the starting point of newly executed contracts.
The Contract Clause Template. Contract clause templates provide a library of vetted legal paragraphs and clauses that can be selected and inserted into any contract that must be created ad hoc. This assures that pre-approved language is used in all required areas.
The Contract Approval Template. Contract approval templates assure that each contract type and contracts of a certain value are reviewed and approved by the appropriate people at the appropriate level. Just as the commitment of your company to a $25 million contract with certain financial and delivery obligations might require the approve of the CEO, CFO, General Counsel, and the Board of Directors, the $1000 annual licensing for a service would require approval by different parties. What this means is that multiple contract approval templates are required for different types of contractual obligations, each defining required automatic notifications, reminder sand updates as to approval progress to assure that contacts are reviewed and approved in a timely fashion. The ability to associatre a particular contract with a specific approval template means that, like clock-work, the appropriate standard approvals will occur as they should.
The Contract Reminder Template. A typical contract has start, renewal and expiration dates, and usually other obligations associated with it. Certain individuals will need to be made aware as such events approach. The contract reminder template provides a unique means to automatically associate and deliver reminder notifications to the cognizant parties as a function of different contract types. It also can alerts others who may be peripherally intested in an event.
We have explored the overall contract management template concept as a process, as well as individual templates that assure that the processes that you intend to happen, actually happen. Templates make your ability to reliably manage contract infinitely easier, assuring consistent process and adherence to best practices.
Tags: Knowledge Base