Managing contracts is no easy task, especially when those contracts contain key deadlines you can’t miss. That’s where contract milestones come into play, but what are they and how should they be managed?
What are contractual milestones?
Contract milestones can be understood in several different ways. That said, contractual milestones most commonly refer to the stages in a contract that outline where one sponsor has agreed to pay a certain amount of the full project price.
This ‘milestone’ represents a key action or event that marks a significant level of progress in the contractual relationship. For instance, this could be finishing the initial prototype of a product or the creation of an initial website design.
These milestones will typically have due dates set out in the agreement, if the expected party does not meet them it could affect when they get paid. Contract milestones are most commonly found in industries such as software development, manufacturing, and design.
When should you use contract milestones?
Milestones could be used to specify:
- A completion date. This would be a date that shows the progress of a development project. For example, the milestone may require that a certain amount of progress on a project is completed by a specified date, to receive payment for work done to date.
- A review date. Set a date to monitor the progress of services provided. In this case, the milestone could ask the buyer and supplier to review progress to date, confirm that services are working to date and according to the plan, as well as review the contract for compliance.
- A deliverable. This could be a report, a proposal, or any other document to be delivered by a specific date.
Common use cases for contractual milestones
As mentioned above, usually contractual milestones are used when a contract is tied to a project or a particular deliverable. Below are some examples of contracts where these milestones may be valuable.
The most common use case for contract milestones is in freelancer agreements. Typically, freelance work is agreed on a set basis and once this has been delivered, the freelancer has paid. However, if they deliver the project or piece of work in stages, they may risk being dropped and left unpaid for that work.
Adding contract milestones that are tied to payments can prevent this from occurring and ensure the freelancer is paid for the work they deliver.
A construction contract is a legally binding agreement between two parties where one agrees to provide construction services in exchange for compensation. The agreement outlines the scope of work, materials to be used, timelines, payment schedules, and other terms and conditions related to a construction project.
This type of agreement may include contract milestones for key moments in the project, to make sure the construction company is paid for the work they have completed. These milestones will need to be set by both parties.
Influencer contracts outline the terms and conditions of a business relationship between a brand (or advertiser) and an influencer.
In a longer contract with an influencer, you may wish to use contract milestones to ensure that particular campaigns are posted on time. As an influencer in this situation, much like a freelancer, you may want to ensure that you’ll be paid for the content you’ve created throughout the relationship with your employer.
What are the benefits of using contractual milestones?
When it comes to creating contract milestones, there are numerous benefits for both parties, such as:
1. Easily determining and recording key dates
Milestones help you to keep on top of key moments in your contractual relationship. As a general rule, contracts set out the delivery of a good or service over a set period of time, often with dates set for the fulfillment of certain milestones as is.
Explicitly stating these milestones means businesses can track these more closely, especially if they use contract management software (CMS) to tag or highlight these milestones. Ideally, companies should select a provider that offers customizable alerts.
This will help you to track deadlines and keep on top of important milestones within the contract.
2. Clear deadlines
On top of knowing exactly what to expect and when, milestones ensure that certain actions will be taken on a set date. This protects both parties within the relationship and avoids friction. As in most cases, a milestone acts like a deadline for a particular action.
This removes the ambiguity from contracts, as parties know exactly when a particular action is expected to be completed. This avoids confusion and repeated extensions, as a financial incentive exists for work to be completed.
3. Stronger workflow management
To create a strong workflow, you need to know exactly when you are expected to deliver something. Milestone management focuses on implementing and abiding by a clear deadline.
In turn, that makes it simpler for tasks to be delegated and the project to be managed as a whole. When key milestones aren’t identified, it becomes easy for a project to be delayed and items to be left until the last minute.
This could even lead to disappointing results, missed opportunities, or worst case, a breach of contract.
4. Simple view of progress
Contract management can be a complex progress, especially if you don’t have a CMS to help you. That said, it's much easier to track and manage the progress of an ongoing agreement if important milestones are being tracked and monitored.
If for any reason a milestone is not met, contract managers or owners can take steps to rectify this. Ultimately, this reduces contract risk and ensures that progress gets back on track in a timely fashion.
5. Improved contract compliance
Ultimately, by monitoring contract milestones closely and trying to fulfill them, contract compliance is bound to improve.
Contract compliance specialists track important metrics relating to compliance and ensure that agreements comply with regulations, among other things, something that comes more naturally when milestones are monitored.
In the long run, this will save your company money as it limits unnecessary loss of business due to contract non-compliance.
How Juro can help you manage your contractual milestones
Juro’s an AI-enabled contract automation platform that helps businesses to agree and manage contracts in one unified workspace.
When it comes to contract milestones, the ability to track and send contract reminders is important. When you create a contract in Juro or manage it through the workflow through approval to electronic signature, you’ll notice that significant dates can be tagged as smartfields within the contract.
Tagging the contract this way means that the relevant field contains metadata, which is searchable and can be leveraged in different ways across the application. In Juro, you can use these smartfields to activate date reminders, so you can track the dates mentioned for
If you’re looking for a platform that simplifies the management of contract milestones, hit the button below to find out more.