The ultimate guide to contract administration in 2022

Explainer
September 16, 2022
min

Contract administration is critical to the execution of business contracts. But it’s also a significant point of friction in most companies, particularly when they’re scaling fast.  

But what actually is contract administration, and how can businesses make the process more efficient? Find out about the definition of contract administration, the challenges contract administrators face, and how to solve them - all in this Juro deep-dive.

What is contract administration?

Contract administration is the process of planning, preparing, organizing, and executing a contract in the run-up to it getting signed. It involves understanding the core objectives of the business contract, outlining the scope of the project, and establishing what each party's obligations ought to be for the best results. 

It also encompasses other tasks too, like preparing contract schedules, embedding contract renewal clauses, and seeking potential vendors to work with. At a broad level, it often involves deciding what the actual terms of a contract should be and using this understanding to draft the final agreement.

What is the difference between contract management and contract administration?

The biggest difference between contract management and contract administration is that contract management describes the organization of the entire contract lifecycle, whereas contract administration only focuses on the preparation and organization of a contract before it’s been signed.

This means that, despite the fact that the terms contract management and contract administration are often used interchangeably, they are actually two distinct processes.

For example, a contract manager will often be responsible for ensuring that contracts move smoothly through the contract lifecycle, from drafting a contract to monitoring the progress of a contract post-signature. 

A contract administrator, on the other hand, will be responsible for tasks like understanding what each contract stakeholder actually wants from an agreement, setting the optimal duration of a contract, and setting out the scope of a project, among other things. 

It’s worth noting that in smaller organizations, it will be common for contract management and contract administration tasks to be undertaken by the same person. However, as your business begins to scale, it can be hard to balance contract admin tasks with other contract management responsibilities, particularly without robust contract tools in place to automate mundane administrative tasks. 

Who is responsible for contract administration?

Usually, it is a contract administrator that’s responsible for contract administration tasks. However, who this is will vary depending on the size of the business and their headcount. For instance, in smaller businesses, contract administration tasks might be undertaken by contract managers instead, or potentially even by commercial teams that have been enabled to self-serve on contracts. 

More often than not, the burden of contract admin falls on legal teams, who are already buried in low-value work. If this sounds like something you can relate to, and you're interested in reducing the time you spend on contract admin by up to 70%, hit the button below. To find out more about contract administration challenges and best practices first, keep reading.

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Examples of contract administration tasks

  1. Sending out requests for proposal: contract administrators are often responsible for sending out a request for proposal (RFP), which is also known as a formal bid to potential partners for certain goods or services. 
  2. Negotiating favorable terms: contract administrators are typically in charge of contract negotiation and seeking the most favorable contract terms for their business.
  3. Establishing timelines and contract milestones: contract administration also involves evaluating the best time frames to be established within a contract, as well as seeking an optimal contract duration. This means deciding when contract renewal dates should be, and when certain obligations ought to be fulfilled.
  4. Outlining the contract’s deliverables: contract administrators tend to be tasked with deciding what each party’s obligations and deliverables should be under a contract, and how these will be met and measured. 
  5. Create contract playbooks: contract administrators are often responsible for establishing standardized contract language and documenting this in one place (usually using a contract playbook).
  6. Reviewing and updating existing contracts: contract administrators are usually expected to evaluate the success of existing contracts, often by analysing contract data. These observations can then be used to improve existing contracts and make contract amendments where appropriate.
  7. Communicate contract terms internally: contract administrators are usually expected to explain and consult business teams on the terms and conditions within a contract.
  8. Assess contract risk: contract administrators are responsible for assessing the risk associated with certain contracts and responding to these risks appropriately.

Contract administration challenges 

⏰ Too much work, not enough time 

Contract admin tasks can be a drain on legal’s time, making it difficult to focus on higher value work. When in-house legal teams with a low headcount are forced to dedicate time to drafting and negotiating standard contracts, the contract workflow can quickly become inefficient. 

Sales teams want contracts turned around faster, finance teams want to be able to project revenue faster and legal can soon become a blocker rather than an enabler when their time is spread too thinly.

The best way to resolve this is to empower business teams to self-serve on contracts, making it easier to scale legal work. In a self-serve contract workflow, commercial teams can create contracts themselves with ease using contract templates, negotiate conditions in accordance with pre-approved terms and free up legal’s time for higher value tasks. 

“Before Juro, it would take legal up to two hours to draft a contract, longer if we had follow-up questions. Now sales can input information and legal can approve the contract - all in 20 minutes” Alicja Kwiatkowski, Head of Legal, Iptor

Read more about how Iptor uses Juro to empower sales to create their own contracts in this case study.

🤝 Lack of business-wide collaboration

Another challenge facing contract administrators is the lack of effective collaboration when it comes to contracts that affect different stakeholders within the company. Since contracts are typically created in Word, which doesn’t offer the collaborative features businesses need to collaborate on agreements, legal typically works in silos on contracts. 

The danger of this is that commercial teams’ concerns and requests often go unheard or unmet, as they’re often not involved in the contracts that affect them most. 

That’s why it’s essential that businesses choose a more collaborative platform to manage their contracts. Juro, for example, allows contract owners to add different parties to a contract and negotiate terms both internally and externally. Juro’s permission controls and sequential approval workflows enable business departments to collaborate seamlessly on contracts in one place and in real-time. 

🎨 Inconsistency when drafting contracts

Contract drafting is a manual process for most businesses. Contracts are often drafted by copying and pasting from existing word documents or written from scratch. This is time-consuming and can result in deviations from established terms, inconsistent wording and multiple versions of the same contract floating around.

These deviations can add risks to your business relationship and cause misunderstandings about the terms at hand - two things that creating a contract is designed to prevent.

Until contracts are created in a more standardized way, such as by implementing contract lifecycle management software or creating a contract playbook, these inconsistencies will continue to wreak havoc within your contracts. 

🖊️ Slow signing processes

Another bottleneck commonly experienced in contract administration is that it takes a long time to get contracts signed and executed, even once they’ve been reviewed and approved. 

This is usually because the traditional signing process is extremely manual. For many businesses, signing a contract means emailing it back and forth, saving it as a PDF, printing it off, signing it in wet ink, scanning it and emailing it back to the counterparty.

Even if the business has modernized the process, it typically involves a third-party eSignature tool that’s separate from the method used to create and edit contracts.

Switching between this many platforms can create friction and delays getting contracts over the line. That’s why most businesses are opting for a more efficient way to sign contract and using electronic signatures instead. 

Securely eSign on any device with Juro's native eSignature

📁 Loss of version control 

Contract administration is hard enough without having to manage multiple different versions of the same contract. A contract workflow that relies on multiple different systems means you end up with different copies of a contract in different formats. This leaves contract administrators unsure of which contract version is the most recent one, and where to find it. 

Fortunately, this process can be simplified by implementing an all-in-one contract tool that enables you to manage contract administration from end-to-end in one platform. Juro is the best example of this. 

When using Juro, contract owners and administrators don’t need to create parallel versions of the same contract or store these versions across shared drives. Instead, Juro users can create a single version of a contract and invite other users to work on the contract in real-time. Juro’s browser-based contract software also creates a detailed audit trail that tells users when contracts were last seen, edited, and signed.

🔒 Lack of transparency 

How long until the contract gets signed? Has it been reviewed yet? What’s holding the contract up? Where can I find a copy of the agreement? These are questions that contract administrators are all too familiar with. 

As the point of contact for contracts up until they’ve been signed, contract administrators are often bombarded with questions relating to the specific terms of a contract, the estimated timelines, and the contract’s progress. 

But what if all of this information could be made readily available to the relevant parties? What if sales could check the progress of a contract in real-time? What if HR teams could negotiate the terms of an employment contract directly to ensure the hiring process doesn’t lose momentum?

When businesses implement contract management software, all of this information is stored in one centralized database. This improves contract visibility and ensures that all of the contract stakeholders have access to the relevant legal documents.

Track the progress of contracts at scale with Juro's data-rich contract repository

How to improve your contract administration processes

1. Encourage business teams to self-serve on contracts

One of the best ways to make contract administration more efficient is to enable commercial teams to self-serve on simple contracts. Doing so means that business teams no longer have to wait around for legal teams to answer queries, action changes, and progress contracts. Instead, they can create, review, negotiate and sign contracts themselves with no blockers. 

“There’s no greater ROI than the fact that by enabling our teams to self-serve, Juro reduced our need to hire a second lawyer" Sophie Salisbury, Head of Legal, Appear Here

Read more about how Appear Here used Juro to self-serve on increasing volumes of contracts with a lean legal team in this case study.

2. Automate manual contract admin and create a single source of truth

In fact, automating manual contract administration can also prove beneficial to the later stages of contract management. For instance, by automating your contracts in Juro, you’re creating your contracts as structured data from the offset. 

This then enables Juro to quickly and seamlessly extract contract data, which can be used to inform strategy and ensure contract compliance, without the need to extract and record all of the data manually. 

Capture contract data from the offset when you use Juro to create contracts
"We know whether our contracts have been signed, and we know where they’re stored for future reference. It’s incredibly helpful when it comes to due diligence exercises in the future, and mitigates the risk for us - it’s hard to put a price on how important that is” James Russell-Jones, Head of Legal, Secret Escapes

Read more about how Secret Escapes was able to create a single system of record for contracts using Juro in this case study.

3. Set up contract templates and conditions 

Enabling business teams to self-serve on contracts doesn’t have to mean that legal loses control. When companies implement contract automation software like Juro, legal teams can bake fallback clauses into contracts, set up conditional approvers, and use automated templates to ensure only pre-approved language is used in legal agreements. 

By setting up these conditions using conditional logic and creating robust approval workflows, business teams can speed up contract administration without adding risk to new commercial relationships. 

“Sales reps love that they don’t need to wait for legal - they draft the contract, and instead of waiting four days for our follow-ups, they often get same-day approval” Alicja Kwiatkowski, Head of Legal, Iptor

4. Enable better contract collaboration

Another contract administration best practice is to implement a platform that enables better contract collaboration and makes contract negotiation easier. 

Contrary to the experience that legal and business teams have redlining contracts in Google Docs or in Microsoft Word, contract automation makes contract collaboration seamless. Parties can: 

  • Mark up the agreement in a rich-text editor designed for contracts 
  • Leave internal and external comments on clauses
  • Tag users to prompt them to review and respond to specific terms 
  • Track every revision and identify points of friction 
  • Bake fallback positions and clauses into contracts based on certain conditions
Tag team members, leave comments and collaborate on contracts in real-time using Juro
“The time I spend replying to candidates and negotiating terms has been reduced by 75 per cent thanks to Juro. I can answer questions and make amendments to the contract immediately without having to remove and re-upload" Karolina Plaskaty, HR Business Partner, Curve

Read more about how Juro reduced the time spent on negotiations and contract markups by implementing Juro in this case study.

5. Codify processes and rules in a contract playbook

When moving forwards with a new, more efficient contract administration process, it’s important to communicate this process effectively with your teams. For instance, you need to make the following things clear: 

  • Who will be responsible for managing which contracts
  • When certain language and fallback positions ought to be used
  • When contracts require approval, and by whom 
  • Which templates are going to be used for which transactions  

This is typically achieved by creating a detailed contract playbook, or better, by automating these processes and workflows using a tool like Juro.

“Our Juro workflow takes care of our standard use case; it’s completely self-serve. Also for deviations, it lets us handle several each day, really fast” Victoria Sörving, Chief Legal Officer, Funnel

Automate contract admin in Juro 

Juro is the only platform that truly enables you to process contracts end-to-end with one solution, reducing friction and removing bottlenecks from your contract workflow.  

On average, Juro users typically win back 70% of time spent on contract admin. Want to join them? Fill out the form below to find out more. 

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