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What is contract management?

02 January 2025

Dirk Jan Leppers, Solution Consultant | ISPnext

Contract management is the process of managing contracts throughout their entire life cycle. This means that organisations create, record, monitor and evaluate contracts. By setting up contract management in a structured way, companies can control risks, reduce costs and ensure compliance with laws and regulations.

Contract management goes beyond administration. It is about control, overview and safeguarding agreements made with suppliers, customers and other business partners. A clearly designed contract management process allows organisations to better anticipate obligations, identify deviations faster and take timely action.

In addition, contract management is an indispensable part of supplier management. It lays the foundation for transparent and predictable partnerships and enables better choices to be made with up-to-date insights.

What is the purpose of contract management?

The aim of contract management is to create added value from contractual agreements. Organisations that apply contract management properly not only gain legal benefits, but also use contracts as a management tool.

Contract management is about keeping an overview of the content and duration of contracts, in order to limit risks and make optimal use of opportunities. In doing so, contracts are not seen as separate documents, but as strategic sources of information.

Key opjectives of contract management

  • Transparency and control: always knowing which contracts are active and which obligations apply.
  • Efficiency: manual processes replaced by structured digital workflows.
  • Risk management: timely signals prevent unexpected extensions or legal complications.
  • Cost control: avoid double spending and unnecessary extensions.
  • Compliance: automatic reporting ensures compliance with internal and external rules.
Within supplier relationships, contract management plays a key role. It supports organisations in their pursuit of long-term cooperation and allows focused adjustment of agreements based on data and performance.

According to Dirk Jan, Solution Consultant at ISPnext: "Many organisations don't realise how inefficient their contract management is until something goes wrong. Contract management software allows you to work proactively instead of reactively, saving time and money."

What are the benefits of contract management?

Effective contract management provides benefits at all levels of the organisation. It ensures central management of contracts, better decision-making and better compliance with agreements.

A well-designed contract management process leads to time savings, fewer errors and more control over legal and financial obligations.

The benefits of contract management include:

  • Full overview of all contract documents and annexes.
  • Quick access to relevant information for all teams involved.
  • Clear signals for expiry dates, extensions or obligations.
  • Improved relationships with suppliers through clear compliance with agreements.
  • Better meet compliance requirements thanks to automatic audits and reports.
"By using contract management software, organisations can not only manage contracts more efficiently, but also use them strategically to reduce costs and minimise risks," says Dirk Jan.
Collega - Dirk Jan Leppers - Foto rond
"Contract management software offers efficiency and control, essential for compliance and compliance."

- Dirk Jan Leppers, Solution Consultant | ISPnext

How can I better manage contracts?

Many organisations wonder how to manage contracts better. The answer is: by investing in digitisation, standardisation and structural monitoring.

Contract management software automates key processes such as renewal reminders, approval flows and compliance checks. In addition, centralising contract data helps prevent errors, duplicate storage and missed signals.

With uniform templates, fixed formats and fixed roles within the contract management process, you ensure clarity and consistency. Moreover, performance can be measured and reported, leading to targeted improvement actions.

As Dirk Jan points out: "Contract management software offers efficiency and control, essential for compliance and compliance."

What phases are there in Contract Management?

Contract management consists of several phases that make up the life cycle of a contract. Each phase plays a crucial role in ensuring control and compliance throughout the life cycle.

The first phase is contract creation. In this phase, contracts are drafted based on clear objectives, terms and responsibilities. Good contract management starts here with clear and legally conclusive agreements.

This is followed by the negotiation phase. Here, contract management offers support in recording change proposals, versions and feedback between parties. This keeps the negotiation process clear and structured.

The third phase is approval and signature. Contract management software supports digital approval of contracts, including audit trail and electronic signatures. This speeds up the turnaround time and increases reliability.

The longest phase within contract management is execution and monitoring. During this period, contractual obligations are monitored and controlled. By using alerts and dashboards, insight is gained into performance, deviations and compliance.

Finally, the evaluation and renewal phase follows. This is where we review whether the contract still meets the needs of the organisation. Here, contract management provides tools to assess contracts in time and make strategic decisions on renewal, modification or termination.

A well-designed contract management process ensures that companies know where they stand at any time, what obligations apply and where there are opportunities for improvement or savings.

Dirk Jan sums it up powerfully: "A structured contract management process ensures that organisations do not face any surprises and can make timely adjustments when necessary."

What is the difference between contract management and contract administration?

Although contract management and contract administration are often used interchangeably, there is an important difference between the two terms.

Contract administration focuses on the operational and administrative side: capturing, storing and tracking contracts. Here, the emphasis is on accessibility of documents and monitoring basic deadlines.

Contract management, on the other hand, goes much further. It is strategic in nature and focuses on continuously monitoring, analysing and improving contractual relationships. With contract management, performance is monitored, risks are identified and decisions are made based on data and contractual KPIs.

In practice, this means that contract management often revolves around where a contract is and what it says, while contract management answers how a contract is being fulfilled and why it may need to be changed.

Organisations moving from contract management to contract management are moving towards strategic steering. They actively use contracts to support business goals and manage risks. According to Dirk Jan: "Whereas contract management is mainly about keeping track of agreements, contract management ensures that these agreements contribute to the business strategy and financial goals."

Wondering how Louwman Group uses contract management to get a better grip on their processes? Read the full customer case for their experiences and insights.

Wouter Jelier - Louwman Group
"The software provides valuable insight and makes our processes more efficient and controllable."

- Wouter Jelier, Finance Executive | Louwman Group

Why automate contract management?

Many organisations struggle with manual contract management. The consequences are missed deadlines, incomplete information and risk of non-compliance. With contract management software, contracts can be stored centrally, linked to workflows and monitored automatically. This makes contract management more reliable and less prone to errors. Automation within contract management also means faster response times, clearer responsibilities and better substantiation in audits or compliance checks. 

What are the next steps in Contract Management?

A structured contract management process ensures that you do not face any surprises and can make timely adjustments when necessary. With contract management software from ISPnext, organisations can structure their processes, reduce costs and mitigate risks.

Want to discover what contract management can bring to your organisation? Request a demo and see how contract management software helps you improve structure, control and collaboration.

Contract Management in 5 steps

Contract Management is crucial for controlling risk and maximising value within your organisation. In this white paper, you will learn how to keep an overview, streamline processes and achieve strategic benefits. Download now and take the first step towards efficient contract management!

Mockup_Preview_Contract Management in 5 stappen (ENG)
Dirk-Jan (1)

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