A Guide To Contract Management In 2025

Contracts are essential for individuals and organizations alike. Beyond signing on the dotted line, everyone must do their part to achieve the desired results. All the parties won’t just execute the agreement and let it be. They have to ensure that everyone is upholding their end of the bargain. 

So, how do you establish performance and compliance? When so much is at stake, you cannot simply wing it and hope for the best. That’s where contract management can help you out! It is how you ensure that everything happens by contractual rights, obligations, and laws. 

What is contract management?

Contract management entails methodically handling all aspects of a contractual agreement, from its inception to termination. It enables businesses to improve performance and mitigate risks while dealing with suppliers, partners, customers, or employees. 

Contract managers and legal personnel employ various tools and strategies to create, negotiate, execute, and monitor legal agreements. How you manage the process—whether it involves Word, spreadsheets, or calendars—determines how the contractual arrangement turns out. With effective contract management, parties can comply with laws and regulations, establish performance, and timely take action for contract milestones. 

Why is contract management necessary?

Contracts are necessary for all businesses, big and small, to run their day-to-day operations. If your organization relies heavily on procurement, you need vendor agreements to ensure that goods and services arrive on time. Contract management is how you achieve these goals. It enables you to maximize value from contractual relationships while maintaining control over performance, compliance, and milestones.

Cost-effective:

Organizations can automate the processes of contract development, negotiation, and execution with contract management software. Also, they can set up automated reminders for reviews and expiry. As a result, there are no unnecessary delays or mistakes in the contracting process that result in losses. 
 
Contract management accelerates the entire contract lifecycle. Therefore, there is little chance that businesses would lose customers or suppliers due to lengthy procedures. Moreover, it empowers the sales team to close more deals in less time. And the companies can benefit from higher sales and profits. Contract management also enables organizations to identify opportunities to improve and expand their businesses.    

Increase Efficiency:

Companies cannot operate without contracting, which is a repetitious and error-prone process. A single ineffective contract can lead to financial, legal, and reputational damage. Contract management offers a complete overview of the contract lifecycle to establish and mitigate contract risks before they cause trouble for the company.  

Automated contracting processes mean the legal department does not have to spend endless hours on low-value, repetitive tasks. Organizations can even utilize bulk actions to generate, share, edit, and approve contracts in large numbers. Thus, contract management improves the efficiency and productivity of the legal department. It also frees up the legal to focus on other crucial tasks.  

How does contract management work? 

Contract management software can help your company manage a variety of key elements associated with your company’s contracts. For example, overseeing that products and services are delivered by vendors and suppliers is a feature that contract management software can track in real time. In addition, strengthening business partnerships between purchasers and vendors is made possible by the efficiencies that a software solution can provide.

Collaboration and communication are kept in a single location on your solution, minimizing the tendency for miscommunications and email back-and-forth. Overseeing the entirety of contract lifecycles with automation, records management, and data analysis and reporting functionalities are all-star features of contract management software that improve visibility and accountability. With ongoing monitoring of your contracts, you can guarantee that all obligations and tasks are completed promptly and that your contractual terms are performed in full.

Finally, managing expiring contracts and terminating contracts is made possible with contract management software. At the time of a contract renewal, you can assess whether to renew, renegotiate, or terminate according to your business’s objectives and the supplier’s performance.

What are the best practices for contract management?  

Contract management offers a wealth of opportunities for organizations to maximize the value of their contractual relationships. Rather than using an outdated approach to managing your company’s contracts with shared drives, email back-and-forth, physical storage systems (filing cabinets), and Excel spreadsheets, you can leverage a digital contract management approach that keeps all of your company’s data secured in a single location that accessible anywhere on any device.

With data fragmentation, you’ll find it increasingly difficult to effectively work and communicate ideas internally and to maintain a productive workflow. Tracking obligations, overseeing key due dates, and locating contracts also become major issues in manual, traditional contract management systems. With missed deadlines, obligations, and noncompliance, your company will encounter unnecessary negative implications like lost revenue, fines, breach of contract, and unfavorable contract renewals. Contract management software will be a burden rather than assistance without proper planning and implementation. There are specific actions that every enterprise should take to optimize its contract lifecycle management, regardless of the type and scale of its operations.  

Standardize Contracts 

Most organizations do not have the time or personnel to create contracts from scratch. One way to do this without turning the proverbial wheel is to standardize the contract creation process. The legal team can employ templates and clause libraries to generate compliant legal documents. Businesses can establish consistent language and clauses for contractual agreements. Consequently, the legal division does not have to deal with hundreds of versions of the same contract. 

Performance Management 

Setting up performance indicators enables organizations to evaluate the effectiveness of their contracts. Contract management allows the legal team to determine specific, measurable goals and assess success. Businesses can choose metrics relating to their needs and challenges with customizable dashboards. Moreover, monitoring KPIs will help the legal team find ineffective processes in the contract lifecycle and improve them. 

Compliance Management 

Having a systematic contract management process empowers organizations to conduct regular compliance audits.  Consistent monitoring of legal and financial pitfalls will help your company to avoid unnecessary risks. Thus, organizations can take the necessary actions to remain compliant. Apart from contractual terms and stipulations, the legal team also should track external regulations. It helps to protect your business from legal transgressions and financial penalties. Eventually, constant compliance checks can perpetuate solid business relationships. 

Authorized Access

Contract management offers a single safe location to store all their contract-related documents. Consequently, the contract managers will not have to spend endless hours searching for necessary information or contracts. Contract management software comes with OCR and AI capabilities making any digitized data easily accessible and searchable. Moreover, CMS also enables the digital workforce to set user permissions for dashboards, widgets, and workflows. Thus, you can prevent leakage and security flaws by limiting access to critical information to the appropriate employees. 

Leverage Integration 

Implementing advanced integrations with your contract management software can go a long way to improving your contracting process. Organizations can utilize e-signature solutions to execute contracts within the CLM (Contract Lifecycle Management) solution.  Businesses can also integrate Salesforce CRM or Dynamics CRM (Customer Relationship Management) solutions with contract management software to empower the sales team to self-serve sales agreements. Utilizing every technology available is the only way companies can keep up with expanding contract portfolios.  

Conclusion

Every organization comes with its own set of possibilities and challenges. Achieving business goals, in the end, depends upon the tools you have in your arsenal and your ability to use them. Contract management can assist the legal team in optimizing the contract lifecycle and clearing any glitches. In the long run, efficient contract lifecycle management can translate to better returns and partnerships. 

Dock 365 offers a powerful and cost-efficient approach to contract management using your Microsoft 365 and SharePoint tenant as the base for contract management. Dock’s easy-to-use, intuitive, and customizable contract lifecycle management software provides unique features and integrations that boost collaboration, efficiency, and productivity. Upgrade your contract management system today with Dock.