Wed. Oct 28th, 2020

Planet Compliance

Innovation & Regulation in Finance

5 Best Practices for Contract Compliance

5 min read

Ever thought why do we need best practices for contract compliance? 

In any case, someone is needed to enforce rules, guidelines, and protocols rigorously. Without proper enforcement, it’s evident that our society will take no time to crash down. And that’s where we get what is contract compliance management! 

Contract Compliance is a type of another concept called contract management. If we apply best practices for contract compliance, all parties automatically get tied to uphold their word. 

The process that goes behind any contract compliance is highly detailed, which requires a keen eye for a proper contract compliance audit. Once the dust settles the intricate details, it becomes even more evident. 

Here are the 5 best practices for contract compliance that can keep all dealings agree in our favour. Don’t just read them, make a contract compliance checklist out of them. 

1. Staying Organized is One of the Best Practices for Contract Compliance 

We should never overlook contracts as one of those are vital to our organisation. As a matter of fact, it’s quite well-known that professional contracts often explicitly specify the time of delivery.

Therefore, it’s all more imperative that we stay on top of things, remain organised, and keep track of deadlines, and the consequences of any failures to deliver the promised output. 

 

Some Do’s and Don’ts That Gives Best Practices for Contract Compliance Management 

Do’s of Comprehensive Contract Management

 

  • It’s highly recommended to double-check every page we sign
  • Make sure to think clearly and strategically through facts and figures
  • Jot down thoughts, additions, revisions, and other aspects to memorise and reflect every detail in the contract 
  • Emphasise such contracts that were curated beforehand as they would be inclined to be in favour of another party 
  • Make sure that we have authority to sign the contract or sufficient time to gain approval from our supervisors before making a promise on a binding contract 

Don’ts of Comprehensive Contract Management

 

  • If we find ourselves having no knowledge about the contract, we should never let any party include terms and conditions as it may cause vulnerability and lead us to a non-beneficial contract
  • Never allow references to be pointed out based on documents we have never seen and verified 
  • Don’t agree to sign a contract unless all of the blank dashes of pages have not been completely filled up
  • Don’t agree to execute a contract that our company or organisation cannot fulfil without going against legal norms 

2. Define Roles and Communicate Effectively

Oversight and Redundancy often go hand in hand. These mistakes can sometimes end up giving you a hefty receipt. Work allocation must be optimised, and the role of each team member should be crystal clear. 

If a team member is underperforming, we should know the reason and tweak it as soon as possible. Basically, a lapse that occurs due to unclear guidelines or poor team coordination should be avoided.

 

3. Establish Goal and Metrics

Sometimes rushed and poorly managed contract management end up getting more time. In the worst case, people forget to renew their contract compliance on time, which is not a small thing to avoid. 

Always remember! Contracts are not formalities. A little leakage can cost a million dollar. 

A contract is a representation of a company’s bottom line, core values, and belief system. That’s why we should fulfil specific goals and guidelines. 

 

Keep Long Term Goals and Short Term Goals to Apply Best Practices for Contract Compliance

To establish best practices for contract compliance and metrics, we should separate short term and long term goals. With a long term vision and proper contract management system, a company or organisation can level up its limit to the sky. 

With short term goals, the company can deal with dynamic changes and keep the team motivated by small achievements. Both are different sides of the same coin and as necessary as the cash flow of a company.

4. Keep A Summary to All the Key Information

Note down any information that seems essential to the contract. In that way, we can ensure that we can build an efficient management process where tasks can be managed hassle-free. 

We must mainly ensure that the key points are always kept in mind while working with any contract. It makes sense because it can stop us from violating terms unknowingly. 

We might also consider utilising a professional contract management system so that we can save crucial information directly. 

Here is what we should consider as key information:

 

  • Particular deadlines and quality guidelines
  • Basic points and instructions
  • Noting anything unusual that may slip our mind is another one of the best practices for contract compliance
  • Miscellaneous instructions that were agreed upon

 

5. Maintain A Contract Template Library to Make Processing Faster 

Maintaining a template library reduces confusion to a great extent. It’s distinctly important that templates are kept up to date. With a fully functional and updated template library, the organisation can ensure that the liability of risks can be minimised.  

More importantly, a good template library saves time as we don’t start from scratch. Beyond this, all we would need to do is carry on with the negotiations and alter a few clauses where required. 

 

Keep Up with Changes As Much Possible

In the end, it boils down to communication and keeping ourselves updated. Good organisation, split responsibilities, contract management software, clear goals, and even up to date templates can make a significant change. 

At the end of the day, both parties must know what is going on. 

In that way, contract compliance can be assured at every step of the process, and the contract lifestyle of our organisation would reach the next level. 

 

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