Managing third party contracts within an enterprise or organisation can be a daunting process. The sheer volume and scope of work required for larger companies can mean thousands of contracts for hundreds and hundreds of vendors. Here are 5 best practices when it comes to streamlining this process.
- Early Involvement
You need to get involved from the start. When you are searching for new third parties to become suppliers, make sure you have a clear-cut engagement model for on-boarding third parties. Each business unit should have clear and concise contract templates, these templates need to be discussed and mutually agreed upon by both parties (your organisation and any third party involved).
- Self-Service Time Savers
When it comes to third party contracts, many of these can be repeat contracts with just the main details tweaked per supplier or vendor. There are no major changes for these contracts so you don’t need to involve your legal department for each and every one.
You can upload these template contracts to an online portal where they will be easily accessible to your contracting staff to effectively negotiate vendor contracts, as well as any interested third parties. Be clear in your attached document as to what your specific requirements are for each department and what documentation is needed on the application. This will streamline your contracting process and save you so much time.
- Contract Performance Evaluation
You may be asking yourself, what is contract management? Also, how does it relate to contract performance evaluation? Contract management and contract performance evaluation go hand in hand.
Your organization needs to be able to appropriately gauge the usefulness and value of each contract. Your company needs to get the most out of every contract whilst maintaining a positive relationship with the supplier or vendor. This contract evaluation needs to be accurately reported on in a comprehensive way that includes the analysis of important aspects like pricing, service standards and negotiate warranties.
- Centralized Contract Information Network
One of the most common best practices when it comes to streamlining the contract process is for businesses to have a centralised contract information database for each of their business units. This way the information stored by one unit is not directly connected to the information stored by another, which can causes issues and complicate efficiencies in communications within the organisation. It is important that your business implements smart and effective strategies to keep your business organised and efficient and operating cohesively.
- Staff Contract Permissions
Different contracts hold different values and risk levels to your organization. It is imperative that your contract staff have different levels of access to contract documentation, depending on their authorization and clearance levels. Therefore, the contract drafting process needs to be directed to the appropriate staff member involved in processing that specific contract.
Drafting the low-value and low-risk contracts can be done by non-attorney professionals, shifting the focus of your attorneys onto the high-value and high-risk contracts. This makes for efficient contracting processes and focused work from your contract personnel on the whole.
Check out my guide on how to start your business right with tons of useful tips I learned by successfully starting, building, and selling multiple companies.