A risk is a part of anything big just like your business. However, not all risk leads to a great outcome. That’s why here are the top 7 contract management risks your business should avoid on order for your business to grow.
Risk comes in many fashions during the contract process. There are a lot of factors attorneys have to examine in order to completely alleviate financial and acquiescence risk for your organization. So without further ado, here are the top 7 contract management risks we hear about from customers.
1. The review process
It dictates the total understanding of both parties to each condition they put out for each other in regards to their partnership, which is very volatile since it’s where most of the dispute in the future arises from.
2. Contract provision control
Legal is responsible for assessing each individual provision in a contract and how much risk each poses individually. A fix for this issue: create contract templates. With pre-approved templates in place, legal is able to quickly assess a newly generated contract to see if anything has been overwritten or changed by others in the organization
3. Contract Obligations
Frequently, an agreement that you sign contains commitments, arrangements or stipulations that – if not met – can keep you from getting installment from clients. You’ll be thankful come restoration time.
4. Managing existing risk
Sometimes what’s best for the business can require a management amount of risk. After the contract has been approved, it’s up to your legal team to trace and consider for any of the possible pitfalls they provided for through the negotiation process.
Pity the corporate lawyer who works for an organization interested in acquiring other companies. You see a whole new line of revenue, not to mention an existing customer base. The legal team sees a whole new slew of contracts that they had no control over during the review and negotiation process. Now it’s up to your team to review and factor any new risk involved in these existing contracts.
6. Contract Amendments
Talking about renewals, your concurrences with customers can advance after some time. Each change that is made to a current contract is viewed as an alteration, and it’s up to your lawful group to decide how these affect your business from a hazard point of view.
7. Contract Storage
Because companies are continually growing with new clients, new goods, new management and so on, it’s essential to know where your contracts live. Gone are the days when a filing cabinet would be an adequate storage option for your organization’s most important files.