What is 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.

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."

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."

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.

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.