Make-goods: A sure sign your company needs contract management
It’s rare when someone in upper-level management asks to see a contract because everything is going so well, so smoothly. Instead, it’s far more common for requests to see a contract when things go bad.
Usually very bad.
When staff need to produce contracts to review for a quick audit or just to confirm deliverables, this is when the need for a contract management solution becomes apparent.
Unfortunately, there is little to be done as a disaster unfolds in your office. If you or your employees have found themselves in the following predicament, you need a contract management solution – and sooner than later.
Consider this scenario: It’s the end of a contract, and just when you thought everything had gone fine with your customer or client, a problem arises. The customer claims they didn’t receive all the deliverables or services promised while the end date is looming or has already passed.
This usually results in a frantic effort to track down all the milestones and actual services performed or deliverables achieved. After a lot of work and collating information from different sources, you then discover that your company does indeed owe the customer.
Say hello to the contract “make-good.” This is a promise to deliver the services or products required in the original contract – or even something else in compensation. Coming at the end of a contract, a make-good is never a good thing.
Resources have to be diverted or allocated that weren’t in original budgets, or people have to be pulled in to work on the by-now “extra” work. The bottom line is that contract make-goods are costly to you and your company.
Had your company implemented a contract management solution, such as Contract Assistant, things might be different. First, with all contract records in one place, information retrieval would be easy. Contract record notes could have been used to mark or note when services or products were delivered as specified.
But what really could have helped was to set alarms to ensure contracts were reviewed long before an end date loomed. Setting an alarm for an interim review could have avoided any problems at an earlier stage, when they are manageable.
A contract management solution can help ensure that key parties are reviewing contracts and vendor services. At the very least, a contract management solution ensures that key contract deliverables are recorded so that retrieving that information is an easy process.
Operating in “emergency mode” is no fun for anyone. It’s especially not fun when you realize your company is bleeding resources (time and money) as a result of not actively managing contracts.
[About the author: Todd Hyten is a former business journalist who now writes about B2B topics and consults on content marketing. You can find him on Twitter and Google+.]