When you’re busy working on client projects, it’s often hard to fit more than a few tasks into each day. However, to enjoy the success you’ve always dreamed of, you need to handle a variety of business responsibilities, such as sales, marketing, finance, accounting, and legalities.
In particular, you need to ensure payments come in on time and in full. One way to do this is to perfect your contract process, so you and your clients get what you need. Read on for some important contract management tips you can follow today.
Know What You Want to Achieve
It’s necessary to work out what you actually want to achieve with a particular agreement. What are your specific needs and goals in putting this paperwork in place? Contracts are legally binding and must be taken seriously by all parties involved. This means you need to know the results you want to achieve by the end date of the contract and what kind of potential risks you need to protect against.
Contract management is always much easier when you know this kind of information beforehand as it makes decisions and negotiations simpler. In addition, by taking the time to think about what you want, you are forced to look ahead and consider most potential scenarios. You will work out what must be planned and accounted for to protect yourself and/or your business, and you can then use the contract to define and mitigate risks in the relationship between yourself and the other party.
Cover The Necessary Information
Of course, once you start to write the contract, it’s also important to ensure the document covers all necessary information, so the risks you want to mitigate are attended to. Keep in mind that contracts need to include more than just the names and contact information of the parties involved; they must also detail the nature of the rights and responsibilities of each person or organization and a list of expectations for each.
To create an effective contract, include performance indicators as part of the obligations involved. By doing this, you’ll ensure that each party is clear, in advance, about what’s required of them and when certain elements must be delivered. By including all the relevant details you’ll also give grounds for the contract to be terminated or for some other consequence to come into play, if the other party doesn’t deliver on time, in full, or to a high-enough quality.
Give Yourself an Out
Speaking of contract terminations, always give yourself some sort of out when creating documents. While you might feel, at the start of the relationship, that you completely trust the other person or business and that you don’t feel there’s any way things can go wrong, unfortunately, it’s possible for relationships to change over time and for others to disappoint you.
It’s quite common, for disagreements to arise because people suddenly become unreliable or the quality of their work goes downhill. To cover yourself, always include a clause in the contract about annulment. This section should state, in simple and easy-to-understand language, which factors can lead to one or both parties ending the contract if they choose. In addition, all contracts should have end dates on them (or times when renewals must be discussed) as this provides another means of closure.
Follow Up Regarding Contract Outcomes and Renewals
If you want to manage your contracts effectively, don’t think of them as “set and forget” documents. Instead, always follow up. You need to check in with the other people involved to find out if they’re doing what they committed to and to see if you’re happy with their current progress.
The frequency of your follow up will vary according to the length of the contract and whether it’s with suppliers, employees or other contacts. You might, for instance, ask for monthly or quarterly updates and/or schedule a meeting on a regular basis to discuss progress.
Following up is important because it means you can discover any problems early on. This, in turn, will enable you to address issues sooner and in a more affordable and time-friendly way. You don’t want to get to the end of a contract and find out that the other party won’t be able to deliver what they had promised
Track impending end dates of contracts in case you need to renew or update them. Time can pass quickly, so it’s easy to think you have plenty of weeks or months ahead of you when you don’t. To avoid running out of time, consider using contract management software. Many products these days include automatic alerts at various key points along the way in a contract’s progression.