Contract management different perspectives.

5 June 2020

A contract management procedure can be started from different perspectives. The chosen starting point will in part determine the focus of the process steps within the entire contract management process.

From the legal standpoint the following aspects are at the heart of the procedure:
• Negotiating and/or tendering by legally authorised individuals;
• Establishing minimum stipulations which must be included in a contract;
• Approval/authorisation by authorised individuals (CoC-registered);
• Establishment of a model contract and/or model articles;
• Archiving of contracts in line with legal requirements;
• Review and adjustment of the contracts;
• Establishment of a checklist;
• Registration of contracts;
• Following of contracts, such as the duration, if obligations are being met, penalty clauses and legal action undertaken against a counterparty.

The following aspects, in particular, are important from a financial perspective:
• Monitoring of the exploitation of contracts (for example purchasing or sales process);
• Timely execution of determined contractual obligations (e.g. payments);
• Employing certain activities in the contract (e.g. price negotiations, delivery terms or payment conditions);
• The delivery of management information from the contracts;
• Establishment and implementation of KPI’s.

The following aspects in particular are important from a process perspective:
• Approval/authorisation of a contract in accordance with the authorisation plan;
• Actual registration via a system, for example from Excel sheet to document management system;
• Archiving of the contracts, both digital as well as physical;
• The establishment and ensuring of a monitoring process;
• The establishment and ensuring of a follow-up procedure;
• Judging and evaluating performance of the counterparty;