Tracking contracts is the ongoing management of contracts following contract execution. This is a critical part of the contract lifecycle and allows legal teams and stakeholders to ensure to meet deadlines and obligations. Appropriate contract tracking also provides a detailed history of your company’s contracts, along easy visibility to high-risk clauses and non-standard terms. Below are four best practices for tracking contracts so you can maximize contract value and minimize risk.
Identify and Monitor Meaningful Contract Data
Tracking contracts successfully requires knowing which data you need to track and having systems in place to report on that information. The first step is determining what you need to know. Below are a few common data points used for tracking contracts.
- Renewal/Opt-Out Periods
- Unique Terms
- High-Risk Clauses
Maintain your Contract Repository
When tracking contracts and their compliance, it’s critical that you know where your contracts are. The contract repository is a central location in which all contracts are stored. This makes them accessible to the necessary team members who are tracking contracts, and ensures that you are always able to find what you need.
Maintaining a contract repository means ensuring that each executed contract is stored in the repository correctly. This may mean abiding by a naming convention, storing in a specific folder/place in the repository, setting permissions for the document, or entering related metadata for the document.
Have a written process for contract storage so that everyone filing documents is tracking the same information. If you have a contract management solution that automatically stores your contracts in a repository, work with your provider to document what is being tracked in relation to that contract. Ensure that all necessary contract data is being collected.
Communicate with Stakeholders
Keeping stakeholders informed is a critical step in both the negotiation phase of the contract and when the contract approaches the renewal or end dates. Contract stakeholders need to know when and how obligations were met, what risks are related to terminating or continuing the relationship, when decisions must be made by, any changes to contract value, along with other critical decision-making details. Tracking contracts successfully on the front end (knowing what data you need to track and keeping executed contracts in a centralized location) enables your legal team to know who the stakeholders are, when they need to be involved, and what they need to know.
Use Workflows to Initiate Next Steps
Workflows can be a very useful tool when it comes to tracking contracts. They can set alerts, provide stakeholders with options for moving forward, and automate next steps based on choices made by stakeholders.
Notify Legal Teams and Stakeholders
Set alerts in your workflow to notify selected stakeholders of upcoming renewal, expiration, deliverable, or other dates. Include relevant information in the alerts as well as reminders of what information should be manually collected, or give instructions or general updates about the contract in these alerts.
Identify/Initiate Options for Next Steps
Workflows can also identify the next steps for your executed contracts. Let your workflow determine whether a contract is up for renewal or simply expiring. The workflow can then send an alert to the stakeholder giving them the option to renew or terminate the contract. Based on their selection in the email, the workflow then automates the next steps and alerts the legal team member responsible for completing the request.