Navigating Contract Management: A Beginner’s Guide to the Roles and Responsibilities Across the Company
In this article, we’ll lay out:
- How to identify common contract management challenges within your company
- The contract management roles and responsibilities of specific teams
- How you can look for and prescribe the right contract management solution that solves your specific challenges, while providing strategic value across the company
With these knowledge points under your belt, you’ll feel more empowered to maximize the strategic value of your contracts and improve the operations of your team.
What Are Some Common Struggles of Contract Management?
Contracts define the terms, responsibilities and obligations between companies and their customers, vendors, partners, and other counterparties. To accelerate revenue and manage renewals, knowing what’s actually in your contracts is essential.
Many companies struggle with contract management, which inevitably leads to missed revenue opportunities, wasted time and frustrated teams. Here are some common challenges:
- Lack of leadership and role designation: In many companies, contract management roles aren’t clearly defined or understood. This leads to confusion, miscommunication and delays, ultimately slowing the contracting process.
- No centralized access: Large companies have numerous contracts to manage. But even at smaller companies, contracts can be difficult to keep track of, especially when you’re dealing with multiple parties and differing timelines.
- Disorganization: Disorganized systems can lead to a lot of wasted time. From digging around to find certain contracts to tracking down a specific term, accessing the right data quickly and effectively is hard. Plus, disorganization can lead to a higher probability of revenue-killing errors.
- Only using technology to optimize efficiency: Companies often implement contract management technologies to optimize workflows, improve drafting efficiency and streamline tasks. But this is a limited viewpoint. Technologies should make things easier, but also drive strategic value through improved contract visibility, financial insight delivery and empowered business teams.
How to Find the Right Contract Management Solution: A Focused Approach
It’s never easy convincing your team or your company to make a change, and some team members or even whole departments may initially resist the idea. Deploying a contract management system can seem complex and may require an investment that some people aren’t on board with.
However, persuading your colleagues is a lot easier when you can clearly show how contract management technology contributes to the company’s overall financial health. This is especially attractive during a slower economy when budgets are tight.
Specific teams have their own unique role and challenges when it comes to contract management. Let’s break it down team by team.
Contract Management for Specific Teams: Roles, Challenges & How to Advocate for Solutions
General Counsel & Legal Team
Roles & Responsibilities
The legal team at your company may include a wide range of roles, such as attorneys, paralegals, contract managers and legal operators. Whether your company has a small or large legal team, they’re involved in creating, reviewing and managing every contract detail.
Regarding contract management, legal teams have a critical role in analyzing the benefits and risks of a contract throughout the contracting process to ensure compliance. If contracts don’t meet regulatory requirements, serious legal and financial consequences can occur.
Their primary duties can include:
- Ensuring compliance and minimizing risk
- Staying up-to-date on evolving legal and regulatory requirements
- Leading contract negotiations
- Drafting and managing contract templates
- Storing and retrieving contracts
- Managing contract metadata, contract terms and renewals
- Answering daily contract-related questions
- Managing their department’s administration, such as billing cycles and CLM systems
Challenges Legal Teams Face With Contract Management
Legal teams are often viewed as roadblocks to contract efficiency, slowing down the process and forcing others to jump through hoops. However, with so much on their plate, it’s not necessarily their fault.
Where time and resources are precious, legal teams want to improve their overall efficiency and be seen as value drivers and deal accelerators. This is difficult without the right focus or contract management solution to help, which can lead to the following challenges
- Team members stuck as the “Corporate Librarian”, spending excessive amounts of time on administrative tasks, such as searching for a specific contract term, and finding and reading the right contracts
- Being unable to use historical insights to identify trends, which inhibits their ability to negotiate better contracts
- Adding staff disproportionately to support sales growth and increasing deal volume
- Not having a clear picture of who is managing individual contracts or the current status of a deal
- Trouble tracking approvals and collaborating effectively
- Delaying business deals
- Struggling to respond quickly to contract-related questions
What the Legal Team Needs From a Contract Management System
When it comes down to it, your legal team wants to be a strategic business partner that accelerates the contract process. And one way to empower them is by transitioning to contract management technology that simplifies everything, so they can increase productivity and save time.
To find the right solution for your team, you’ll need a contract management system that can address their ongoing challenges. Consider a system that has the following capabilities and how they would impact your overall efficiency:
- Visibility of contract requests and statuses: A visibility feature takes all the guesswork out of who’s managing a contract and its current status, which can push deals forward at a faster rate.
- Organization and searchability: Imagine the convenience of being able to quickly find a specific counterparties contract, its data, and all related contracts. This drastically reduces time spent on administrative tasks and finding answers to questions.
- Accurate reporting: With a digital contract repository, the legal team can extract key contract data and historical trends. They can use these insights to inform and improve their negotiation process, and answer executive requests.
- Easy-to-use: A simplified contract management system is incredibly time-saving, storing everything in a single, easy-to-find place. This removes the need to add more people to the legal team and improves your ability to accurately scale department and business growth.
Chief Revenue Officer (CRO) & Sales Operations Team
Roles & Responsibilities
As a revenue-driving force, your sales team is often involved in the entire lifecycle of a contract. Each member must ensure they know and deliver messaging that accurately aligns with your company’s contract terms. Otherwise, they can unknowingly mislead clients and put the company at risk.
Key contract management responsibilities of the sales team include:
- Negotiating deal terms with potential clients, such as pricing and timelines, while ensuring the contract terms are consistent
- Drafting contracts or collaborating with the legal team to do so and making sure the contract aligns with the negotiated terms
- Monitoring the performance of their accounts, such as ensuring terms are followed and identifying areas for improvement
- Renewing contracts and maintaining strong client relationships
Challenges Sales Teams Face With Contract Management
From the initial call to the final signing of a deal, sales teams are focused on reducing their sales cycle times so they can speed up deal closures from request to renewal. Unfortunately, the mix of managing contracts and sales-related tasks can lengthen the time to close deals and cause missed renewals.
Sales teams often have to rely on other teams for answers and work across multiple departments, creating a bottleneck that causes frustrating delays. Without easy contract access and reliable visibility, they can wrestle with challenges such as:
- Not having insight into where a deal sits, being unable to track a contract status and contending with slow contract turnaround times, all of which hold up or even kill deals
- Spending way too much time on administrative tasks related to contracts and cross-departmental communication instead of focusing on selling, all of which cost money and lower morale
- Struggling to understand and manage customer renewals, which causes missed revenue opportunities and detrimental missed renewals
- Having to spend a lot of time piecing things together to achieve a full view of each account
- Wasting time trying to locate contracts due to disorganized archives
What the Sales Team Needs From a Contract Management System
Your sales team wants to focus on what they do best: selling. To help them accelerate the sales pipeline, they need a simple contract management system that streamlines requests, cuts down on time-consuming administrative tasks and improves visibility & access. To do this, explore a contract management system that accomplishes the following:
- Provide CRM integration: This is the ability to centralize contract requests, automate workflows and provide an instant view of contract status, which can free up a significant amount of time for your sales team.
- Have reporting, dashboards and renewal alert capabilities: With automated alerts of upcoming renewals, concise reporting and a simple renewal dashboard across each rep’s accounts, more contract renewal deadlines will be addressed on time.
- Enable contract requests and status checks: This feature provides simple contract request forms and visibility into the status of those requests throughout the contracting process, all right from your CRM.
- Offer contract access and product summaries with self-service: By giving the team access to the contracts for their accounts and product summaries directly inside of your CRM, they can eliminate back-and-forth communication that lengthens deal closures.
Chief Financial Officer (CFO) & Finance Team
Roles & Responsibilities
Your finance team plays a crucial role in contract management, as they manage all the financial aspects of your company’s contracts. From budgeting to invoicing, they’re focused on avoiding financial risk and dips in revenue.
The finance team works with the legal and sales teams to evaluate whether contracts align with the company’s financial strategy. Their primary contract management-related tasks include:
- Managing pricing terms and creating invoices
- Ensuring payments are received in a timely manner
- Tracking contract renewals and identifying slow or missed payments
- Managing budgets and tracking costs for each contract
- Reviewing and assessing financial terms
- Evaluating the financial performance of contracts and contract renewals and creating reports of the performance
- Meeting financial obligations with vendors and evaluating vendor relationships
- Keeping accurate records and auditing contracts to ensure compliance
Challenges Finance Teams Face With Contract Management
In the world of contract management, the finance team wants to make sure renewals aren’t missed, obligations are met and costs are kept in check. When a contract management solution is too complicated, inaccurate or not adopted, it can lead to difficulties like:
- Missed revenue opportunities, such as price uplifts, and missed revenue commitments
- Troubles in forecasting renewals
- Experiencing unwanted vendor auto-renewals and missing negotiation opportunities
- Slow and drawn-out contractual processes related to mergers, acquisitions, and divestitures that delay revenue
- Inability to accurately monitor the Total Cost of Ownership (TCO) of the contract management solution, leading to unnecessary CLM costs
- Long time-to-value or low adoption as compared to other solutions
What the Finance Team Needs From a Contract Management System
As you explore ways to empower your finance team with a contract management system, there’s a few key things to keep in mind.
First, its capabilities should align and contribute to the company’s overall financial goals, in order to justify the cost. Next, the system should help remove the current roadblocks your finance team encounters on a regular basis, so they can improve their accuracy and efficiency.
Some key contract management system requirements to look out for include:
- Renewal management: When a system can easily create an accurate, full-view report of upcoming customer and vendor renewals, it eliminates missed opportunities and maximizes the team’s time.
- Financial term reporting and analysis: This allows your team to easily and automatically identify financial opportunities, like price uplifts.
- Accurate data extraction and analysis across ALL contracts: This feature quickly identifies revenue commitments across all accounts for ease of forecasting. It also accelerates mergers, acquisitions, and divestitures to realize benefits faster.
- Automated alerts with historic pricing information: With automated alerts and reports, the finance team is less likely to miss deadlines and price adjustments for upcoming renewals of vendor contracts.
- Transparent pricing and scalability: A business’s success relies heavily on its ability to scale. With transparent pricing, the finance team can focus on quick wins by fixing the highest value challenges first and scaling from there.
Overall, What Should My Organization Look For In a Contract Management Solution?
If we could shout one thing from the rooftops, it’s to keep your contract management requirements simple. This doesn’t mean using technologies that lack capabilities. It just needs the right ones.
These capabilities should support your company’s specific needs, including your team’s efficiency, contract visibility and strategic revenue goals. In short, your contract management system needs to put the right information in front of the right people at the right times.
Not Sure Where to Go From Here? Pramata Can Help.
Whether you’re just starting out in contract management or feel the need to improve your team’s processes, it can feel daunting to determine which contract management system is worth the investment. Our team can help you achieve your goals, improve your contractual relationships and deliver the financial insights you need.
Learn how our radically simple contract management eases the burden of already maxed-out teams and does the heavy lifting for you with a live demo today.