Contract Management Best Practices

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What is the primary purpose of contract management?

To create legally-binding agreements
To monitor contract compliance only
To extract maximum value from contracts while remaining compliant with regulations (correct)
To renew or close out contracts only

What determines the overall success of a business?

The number of stakeholders involved
The size of its legal team
The strength of its contract management process (correct)
The number of contracts it has

What is the benefit of building standardized and collaborative contract management processes?

It increases contract negotiation time
It reduces contract compliance monitoring
It gets all stakeholders working in the same way (correct)
It eliminates the need for contract renewal

What is the result of effective contract management?

Achieving negotiated outcomes consistently (A) Signup and view all the answers

What is the main purpose of having a clear process for contract initiation?

To capture requirements and agree on sign-off parties (C) Signup and view all the answers

What is the scope of contract management activities?

From initiation through to execution (C) Signup and view all the answers

What is the primary focus of contract managers during the contract negotiation stage?

Reducing costs and controlling spend (B) Signup and view all the answers

What is the purpose of the execution stage in the contract lifecycle?

To produce and share finalized documents (A) Signup and view all the answers

Why is it important to have a strong contract management process?

To influence the outcomes of the agreements (B) Signup and view all the answers

Why is the start-up stage of the contract lifecycle often overlooked?

Because there is a rush to get the contract up and running (A) Signup and view all the answers

What is the primary benefit of regular contract monitoring?

Ensuring compliance with regulatory requirements (A) Signup and view all the answers

What is a common mistake businesses make during contract renewals?

Not making a clear note of the renewal date (C) Signup and view all the answers

What is the importance of having a clear line of sight into all contract renewals?

To minimize risk and generate value from contracts (D) Signup and view all the answers

What is the purpose of the close-out stage in the contract lifecycle?

To ensure that all necessary information is available for future use (B) Signup and view all the answers

What is the main benefit of applying contract management principles throughout the contract lifecycle?

Creating opportunities to restore visibility and take back control (B) Signup and view all the answers

How many stages are typically involved in the contract lifecycle?

7 stages (C) Signup and view all the answers

What is the primary benefit of collaboration across all teams in contract management?

Shared workloads and responsibility (A) Signup and view all the answers

Why is it essential to build an auditable history of contract actions?

To ensure business continuity and prove compliance (D) Signup and view all the answers

What is a potential risk of not having a clear ownership of contract renewals?

Unpreparedness at the time of renewal (A) Signup and view all the answers

What is the benefit of using CLM software to automate the renewal process?

Increased accountability and consistency (A) Signup and view all the answers

Why is it essential to integrate CLM software with existing tech stacks?

To align with user needs and existing workflows (C) Signup and view all the answers

What is the primary benefit of using contract management software?

Automated contract administration and reduced workload (D) Signup and view all the answers

Why is it important to have a clear understanding of who is responsible for which part of a contract's lifecycle?

To avoid bottlenecks caused by poor communication (A) Signup and view all the answers

What can happen if a contract owner leaves the business and nobody else picks up the monitoring?

The business will be exposed to contract risk and non-compliance (A) Signup and view all the answers

What can spot-checking individual contract records periodically from different areas of the business provide?

An insight into the robustness of the contract management process (D) Signup and view all the answers

Why is it important to capture every action taken against a contract and provide a timestamp, name, and date?

To help with business continuity and prove compliance (A) Signup and view all the answers

What is a major drawback of manual contract management?

It is prone to human error and compromises data security (A) Signup and view all the answers

Why is data security a priority in contract management?

To ensure compliance and prevent data breaches (C) Signup and view all the answers

What is the estimated cost of poor contract management?

9% of revenue (D) Signup and view all the answers

What is the purpose of Contract Lifecycle Management (CLM) software?

To manage contracts end-to-end (B) Signup and view all the answers

Why should businesses prioritize improving their contract management approach?

To address legacy contracts and prevent further accumulation (B) Signup and view all the answers

What is a key benefit of automating contract management processes?

Improved visibility and control (C) Signup and view all the answers

What can be a barrier to implementing a contract management solution?

Number of legacy contracts (C) Signup and view all the answers

What is a characteristic of successful contract management?

End-to-end management of agreements (C) Signup and view all the answers

What can be a consequence of poor contract management?

Risk exposure and reduced ability to retrieve full value from agreements (C) Signup and view all the answers

Why is it essential to choose the right Contract Lifecycle Management software?

To ensure the success of contract management processes (D) Signup and view all the answers

What does effective contract lifecycle management provide?

Total visibility of contracts and a single source of truth (B) Signup and view all the answers

What is the result of managing contracts in a silo?

Limited visibility and poor decision making (B) Signup and view all the answers

What is the purpose of integrating CLM with VLM and TPRM?

To break down silos and streamline processes (C) Signup and view all the answers

What is the limitation of managing contracts via Excel or shared drives and emails?

It struggles to reach the vision of effective contract management (C) Signup and view all the answers

What are the pillars of effective contract management?

Visibility, control, and compliance (D) Signup and view all the answers

What is the importance of a central contract repository?

It provides a single source of truth and visibility (B) Signup and view all the answers

What is the limitation of having gaps in contract management?

It leaves the business open to increased costs and business risk (C) Signup and view all the answers

What is the importance of including the entire organisation in contract management?

It allows stakeholders to apply a coherent strategy to agreements (B) Signup and view all the answers

What is the benefit of implementing contract management processes?

Significant benefits can be realised by working on a proportion of contracts (D) Signup and view all the answers

What is the importance of aligning people, processes, and technology around managing contracts?

It releases the full value contained in contracts (B) Signup and view all the answers