Contract tracking can be especially challenging for firms that handle hundreds and thousands of complex contracts. By leveraging specific contract management software, you can master contract tracking and improve your contracting processes overall. With an inefficient and disorganized contract tracking system, you increase potential risk and the possibility of security breach complications.
To keep contract volumes appropriately at scale, it’s necessary to implement contract tracking so that you can stay involved within each step of the contract lifecycle.
What is contract tracking?
Contract tracking is the process of locating where a contract is within the contract lifecycle. While conducting various tasks pertaining to contract life cycle management, it is necessary to have an efficient contract tracking system so you can properly understand what step the contract is currently on, and then navigate its remaining steps. This is also key to effective internal communication within contract life cycle management teams.
What is contract life cycle management?
Contract life cycle management is a process created to manage contract life cycles that are either administered or created by a company. For example, types of contract life cycles that are managed include outsourcing, intellectual property, and licensing contracts (Gartner_Inc.).
What are the seven stages of contract lifecycle management?
During the contract lifecycle, contracts go through many important stages including the following:
- Planning: evaluate and outline contract objectives and design appropriate management operations to address potential pitfalls and to maximize efficiency.
- Implementation: utilize contract management software, like our Dock 365 Contract Management System, to automate, simplify, and modernize your contract management process.
- Pre-contract: consult contract administrators to clarify problems within the contract. In this stage, you develop new agreements for standard contracts.
- Handover: following contract signature, deliver the contract to the party executing the contract. Ensure all contract details are finalized prior to this step.
- Contract: fulfillment of contract by vendor and buyer as outlined in the agreement. Employing our Dock 365 Contract Management System can help keep deadlines and deliverables on the correct track.
- Pre-renewal: re-evaluate the contract and decide to renew, terminate, or renegotiate the existing contract by a specific date. Our Dock 365 Contract Management System provides automated alerts and notifications so that your business never loses sight of a renewal date.
- Post-contract: verify that contract conditions are fulfilled, and invoices are paid prior to archiving the contract. (ProcurePort, 2021)
The Importance of Visibility in Contract Tracking
Maintaining visibility is crucial in contract tracking. Without appropriate visibility and transparency, challenges may arise. For example, contracts are developed to produce a desired outcome. If there is insufficient visibility regarding the contract’s status, then contract teams can be misinformed on where specific documents are within the lifecycle.
Transparency at throughout the contract lifecycle is best possible model for contract management teams. To illustrate – if a contract manager is interested to know where a contract is sitting within the pre-renewal process, having an effective contract tracking system will be able to provide the manager with an instant answer.
Pitfalls Of Contract Management With Insufficient Contract Tracking
Contract tracking is imperative because it keeps the contract management team fully informed of where a contract is located within its lifecycle.
Without contract tracking, the following poor results may follow:
- Ineffective communication
- Failure to identify where the contract is located within the contract lifecycle
- Dissention between departments (i.e., business and legal)
- Heightened risk potential
- Misplacement or loss of contracts
Improve Contract Management With Contract Tracking
Embracing contract tracking technology can be a catalyst to more visibility and efficiency within your contract management processes. By utilizing an effective contract tracking tool, you can increase efficiency, boost collaboration efforts, develop flexibility in task management, design automated alerts, improve contract approval speed, and create security in document storage (Votlucka, 2021).
Certainly, manual contract tracking systems work, but they cannot handle the complexities that a high contract volume provides. By organizing a contract tracking system that is equipped for such contracts, your processes can be improved by the secure and upgraded contract intelligence and workflow automation.
Implementing a contract tracking solution that offers accessibility in contract reporting and analytics can simplify the various tasks associated with contracts. Some of these tasks include, but are not limited to the following:
- Contract authoring
- Negotiations of contracts
- Contract approvals
- Task automation
- Management of contract status
- Support in contract execution
Use Technology for Your Contract Tracking Advantage
Contract management software assists contract tracking with its various features – heightened visibility, a dependable contract repository, a preapproved contract clause library, accessible performance metrics, audit trails, and refined contract collaboration.
When searching for contract management software to help you track contracts, we recommend looking for specific features including:
- A secure contract repository
- Audit trail capabilities
- Tracking for all attachment types
- Monitoring of vendor compliance
- Award tracking
- Contract record audit logging
- Customizable fields
- Automation (i.e., alerts and notifications)
- Streamlined workflows
- eSignature capabilities (Votlucka, 2021)
Implementing contract management software to effectively track contracts helps streamline and simplify your contract management process. Contract tracking enables you to be proactive in your risk management strategies while maximizing time-efficiency and increasing savings. From increasing visibility, to optimizing internal collaboration, contract tracking is a necessary tool for your business.
By utilizing contract tracking, you can create ease and efficiency for your stakeholders by giving them the ability to know exactly where contracts are within their lifecycle. While manual and hybrid contract tracking and management systems are typically sufficient for businesses with a lower volume of contracts, these systems are often not fully equipped for high volume, complex contracts. To maximize results, reduce risk, increase security, and get the absolute most out of your contract management and contract tracking solutions, we recommend adopting contract management software with contract tracking capabilities.
Gartner_Inc. (n.d.). Definition of Contract Life Cycle Management (CLM) - Gartner Information Technology Glossary. Gartner. https://www.gartner.com/en/information-technology/glossary/contract-life-cycle-management-clm.
ProcurePort. (2021, March 11). Contract Management VS. Contract Administration. ProcurePort Blog. https://blog.procureport.com/contract-management-vs-contract-administration/.
Votlucka, M. (2021, May 13). Contract Tracking: Mastering Contract Management Series. CobbleStone Leaders in Contract Management Software℠. https://www.cobblestonesoftware.com/blog/contract-tracking-mastering-contract-management-series.
Written by Lindsey Paulk
Lindsey Paulk is a Content Writer in Jacksonville, Florida that specializes in digitally communicating all-things contract management.