The 8 steps of the contract management process

The following steps 1-4 (contract initiation process) comprise the first part of the DOCM contract management process, which is shown here in an eEPK diagram.

The levels 5-8 comprise the second line of the active DOCM contract management process with checking of the agreed deliveries and services as well as monitoring of the contract end date. The current contract status provides information about the processing status of a contract in the contract management process.

Vertragsprozess

 

 

1) Inquiry
After completion of the offer process, business users need to legalize a contract (e.g. service contract, standard license contract, etc.). The contract filing - often one or more filing cabinets, a single computer or file server - is often unorganized because there are no templates for creating consistent contracts.


2) Creation
The legal and organisational need for individual departments to participate in the preparation of each individual contract, whether standardised or specific, is the phase in which a bottleneck typically occurs and therefore needs to be clearly defined.


3) Negotiations
At this stage, negotiations begin to determine the terms and conditions in the final contract.


4) Approval
The terms of the contract must be approved. Depending on the size of the contract, it must be approved and signed by the legal department, executives, stakeholders, internal departments and the client. Levels 1-4 are often referred to as the contract initiation process.


5) Execution
Contracts are enforced and often stored in filing cabinets or separate archives, where they are difficult to find and therefore change.


6) Text search/reporting
The existing contract stocks often cannot be searched automatically and reports cannot be executed because contracts cannot be found at the defined storage location. The entire contract analysis, if necessary previous contracts, must then be carried out manually.


7) Compliance
Are both parties maintaining their contracts? It takes some time and effort to figure this out because your employees have to manually review transactions against contracts to look for signs of non-compliance.


8) Change/Revise
Most contracts have defined end dates. The contract partners can then decide to let the contract expire, renew it or renegotiate it. These contract end dates often go unused and cause unnecessarily high costs, which can be avoided by using automated e-mail notification workflows.

More about the topic

The process communication takes place on the basis of a rule-controlled DOCM e-mail dispatch to a defined SharePoint group "Contract Manager". The trigger is usually a missed deadline of set resubmission dates. If a processor uploads or changes documents to the contract partners or contracts, an e-mail is sent to the "Contract Manager" group.
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According to a general definition, a process is a cross-functional, reproducible sequence of activities with defined interfaces (to other processes) and responsibilities.The goal definition is to ensure smooth cooperation in the sequences and a target-oriented flow of information within the company.This goal is implemented organizationally by a cross-departmental process responsibility with defined tasks.
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As early as the contract initiation phase, draft contracts must not only be examined according to formal legal criteria, but also assessed with regard to the risks inherent in each contract. As some cases in recent years have shown, early examination and evaluation in the run-up to a contract would not have given rise to problems in the "final phase of contract negotiations".
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