Intercompany relationship is impossible without contracting. Signing agreements ensures obligation performance and provides legal safety to all parties. Not long ago firms had to carry out the process of creating and approving contracts manually (small companies still can afford it). Now businesses automate the process to make it more efficient, transparent, and controllable.
Purchasing software is a serious step that may imply considerable expenses. When shopping for contract lifecycle management software, be sure to take into account the number of employees that can participate in the process. This information is crucial for estimating how many software licenses you need. We hope this blog post will help you understand how the process is conducted and who may take part in it, so that you could better assess your requirements.
The contract management process includes several steps. It starts with the authoring stage, when a responsible employee creates a contract. He or she generates a draft or log a contract into the corporate system and is responsible for moving it through all approval stages and making it signed. This role may be played by any employee, but is typically performed by procurement or sales specialists.
When the contract is ready, here comes the approval stage. Ordinarily the first approvers are the project manager and a legal department specialist. They make sure the contract is drawn up fully and correctly, focusing the review on the business implications of the contract terms and conditions. They consider such issues as making sure that duties of the parties are clear and consistent, the contract is appropriate and meets company’s missions and responsibilities.
Then the contract is sent for approval to the next level, which is usually represented by the middle and top management: procurement or sales departments’ authorities, financial director, chief accountant, etc. Such approvers are responsible for giving the final approval to the contract. Usually organizations determine approval sheets in accordance with contract types. Thus, sales and purchase contracts get approved by different people; only financial, legal, and accounting management take part in approving all agreements on a constant basis. Anyway, each company determines main participants of contract approval individually, taking into account the organization’s size and structure.
When the contract is approved by all participants, which means it is correct, serves the company’s purposes and carries minimal risks, it can be sent for execution (signing). First, the contract gets signed by the company’s CEO, and then it is sent to the second party’s signee. After both parties have signed the agreement, they become legally bound to fulfill their contract obligations. Obligation fulfillment may also involve representatives of departments that didn’t take part in contract approvals. Thus, contract management process engages not only author and approvers, but also obligation performers.
Let’s estimate how many people could take part in the automated contract management process in a company with approximately one hundred office workers.
We have enlisted 9 participants that are minimally needed to carry out the contract management process. Although our example is rough and cannot take into account your company’s individual structure, size and accustomed practices, it still can help you better understand your needs to take a right decision when shopping for contract management system.
If you are searching for contract lifecycle management software or want to learn more on the topic, visit our website (www.orienge.com/contracts) dedicated to contract management automation.