5 Crucial Best Practices for Tracking Contract Compliance
Contract compliance is a two-way street. To comply, you need not only to be fully aware of what to expect from the counterparty but also needs to be aware of what the counterparty expects from you. Without contract compliance, neither party will obtain what it needs and, in the process, countless time, money and effort are lost. Therefore tracking contract compliance should be seen as an essential part of the contract lifecycle.
Understanding the importance of tracking contract compliance, how can a company go about it? A few contract compliance best practices are:
- Keep an updated database of templates and use your company’s own templates as a baseline for contracts as much as possible.
- Keep a database of all signed and active contracts.
- Keep a summary of all the key information about your contracts. Key information includes start date, end date, type of renewal, duties and obligations, notices, payment dates, etc.
- Track contract compliance and measure the quantifiable gains and losses related to it. These include lost revenue and penalties for non-performance.
- Identify historical reason for non-compliance in past contracts and the counterparties (customers and vendors) most likely to not comply.
Contract compliance is a two-way street
These practices are a good starting point for tracking contract compliance tracking and using it for your companies’ best interests.
An initial approach to contract compliance tracking is to manually compile all the information and have an updatable list to be reviewed when needed. This approach is viable when contracts volume is low. However when contracts number in the hundreds or thousands manual tracking of contract compliance quickly becomes a drag on productivity.
Manual contract compliance tracking is very time consuming and heavily relies on employees to manage large amounts of data manually. Furthermore, the likelihood of human error makes manual contract compliance tracking a business risk in itself.
The best solution to ensure contract compliance?
Fortunately, modern contract management systems such as ContractRoom are designed to automate the full contract lifecycle – including contract compliance. While you might think for contract management software as primarily focused on reducing the time required to create and sign a contract more robust platforms commonly referred to as Contract Lifecycle Management, also automate post-signing tasks such as contract compliance.
A CLM system such as ContractRoom keeps a database of past contracts in an intelligent repository to make the process of contract compliance tracking as easy as searching in your web browser. Using AI and machine learning to automate contract compliance is valuable enough that many companies choose to import past contracts that were not created into the system into ContractRoom’s repository to enable contract analysis and contract compliance tracking on their entire corpus of contracts.
To see how a CLM platform like ContractRoom can help you automate your contract compliance tracking, contact us to schedule a demo.