5 Pain Points In A Typical Contract Management Lifecycle

5 Biggest Pain Points in a Typical Contract Management Lifecycle

Contract management software is a powerful tool for helping companies manage their contracts. But managing contracts can be tough, and there are plenty of pain points that you will encounter throughout a contract's lifecycle, whether you or the business you created the contract with is at fault. We've compiled a list of the 5 biggest pain points to help give your company an idea of what it might take to improve your contract management process.

Whether the biggest issue you face in your contract management is in the initiation, negotiation, pre-agreement, review, or renewal phase of a contract, we have you covered.

1. Getting the Contract Signed in the First Place

Companies need a contract management system to help them manage their contracts. Without one, you will likely have issues like back-and-forth negotiations without an official agreement and misunderstandings about what is actually being agreed on. If this happens more than once, it can lead to problems with renewal dates. Problems with renewal often lead to further contract management issues if not ending up in failed renewal.

A company should have a system in place to help them manage their contracts and keep track of the status at each step. That way, they won't lose out on any opportunities because of missing deadlines or misunderstandings with other organizations about what is actually being agreed upon.

2. Lack of Communication

It's not enough to have a contract management system in place; you also need to make sure that the people who are supposed to be managing contracts understand how it works and when they should use it. Make sure that everyone involved with any of the phases understands what is expected from them and uses your contract management software accordingly.

Having a process for communicating expectations makes the job go more smoothly, saves time, and prevents confusion. Contract management software will save both parties headaches down the line by avoiding misunderstandings or missed deadlines.

The communication phase is important because it helps set up expectations for all other steps in a contract lifecycle without spending too much time on each step individually.

3. Inconsistent Legal Language

Inconsistent legal language in a contract can result in missed deadlines, confusion about expectations, and disagreements. Your contract management software should be able to highlight inconsistencies in the language or missing information that could lead to these issues before they happen.

The pre-agreement phase is crucial because it’s where you outline what will actually be covered by the agreement and how long your agreement will last for. It also helps avoid misunderstandings later on down the line when things start happening.

It is important to use contract management software during this stage of a contract's lifecycle so that all parties involved with an agreement have access to clear legal language at any given point in time without relying on email chains or documents sent back and forth between departments within their company.

4. Poor Financial Management

The ability to correctly manage finances is a crucial part of the contract management lifecycle, and it’s particularly important during the review phase. A contract could be misconstrued due to financial issues when an organization doesn't have good records or has poor internal communication as well as not using proper budgeting procedures.

It's also critical for any company considering entering into a new agreement that they can fully understand how their current contracts will affect future revenue streams. This makes financial planning imperative in order to ensure all parties come out satisfied with the terms of each agreement going forward.

5. Lack of Oversight for General Counsels

When a company has an executive who also serves as the general counsel, it can create challenges for other staff members. From their understanding of legal ramifications to dealing with financial issues and compliance tasks, there are many responsibilities that may fall by the wayside when one person is so stretched thin. This leads to mistakes such as overlooking potential risks in contracts or not having full knowledge of how something will affect the company's future revenue streams.

Companies should be aware that this type of role often requires someone with expertise from outside management and beyond legal counseling - which means they might need hiring assistance to find the best candidate for this crucial position.

The average contract manager spends 21 hours per week on "non-core duties."

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