Contract monitoring: best practices

Guides
September 18, 2022
min

Contract monitoring can feel like an uphill battle for businesses that have no system of record for contracts. But it doesn’t have to be. 

Discover what contract monitoring involves, best practices, and why it matters in this Juro deep-dive. 

What is contract monitoring?

Contract monitoring is the process of tracking the performance and status of your contracts to ensure that the obligations within them are being fulfilled as intended

Contract monitoring typically involves reviewing the progress of individual contracts and the data associated with them. It often also involves assessing contract compliance and then identifying and correcting any problems that prop up in the process. 

Why is it important to monitor contract performance?

Monitoring contract performance is important for fast-growing businesses since it enables them to regain control over their contracts. It also helps them to ensure that they’re fulfilling their contractual obligations and identifying inefficiencies within their existing contract workflow

By doing these things, contract monitoring enables legal and business teams to avoid breaching their contracts and maintain successful relationships with their customers by delivering on their promises. 

But monitoring contract performance isn’t only important as a preventative measure, it’s also important as it helps businesses look to the future, too. By monitoring contracts closely, scaling businesses can project their growth more accurately, flag existing friction points, and remove blockers that will slow them down. 

Who is responsible for monitoring contracts?

Since monitoring large contract volumes is a hefty task, it’s common for multiple stakeholders to be responsible for contract monitoring. These stakeholders typically include:

  • Legal teams: It’s common for legal teams to monitor contracts closely, as they use these to record against legal department KPIs and ensure that contracts are correctly templated and complied with.
  • Finance teams: Finance teams are typically tasked with monitoring contract renewals to ensure that forecasts are accurate and renewal deadlines aren’t being missed.
  • Customer success teams: It’s not uncommon for customer success teams to also assist with monitoring contracts. By monitoring the terms agreed upon within contracts and the performance of a contract, customer success teams can quickly identify breached plans or opportunities for expansion.

How to monitor contracts

There are a few ways in which businesses can monitor their contracts effectively, and what they choose to do will depend on their specific goals. We’ve detailed a few typical steps to effective contract monitoring below. 

1. Understand what you actually want to monitor 

Monitoring contracts aimlessly is often as bad as not monitoring them at all. The first and most important step to contract monitoring is recognizing what exactly it is that you want to monitor, and why. 

Most businesses will want to monitor the performance of contractual obligations to ensure that contracts are being fulfilled on time and to the correct standard. 

Meanwhile, some businesses will also want to monitor how long contracts stay in each stage of the contract lifecycle so that they can understand how to speed up contract workflows. 

Others will want to monitor the data contained within contracts to gain an insight into understanding the contents and nature of contracts. 

Regardless of what your objectives are when deciding to monitor your contracts, it’s important to establish these before setting up a contract monitoring process or system. This is because some processes will serve different objectives better than others. 

2. Allocate responsibilities 

Once you’ve established precisely what it is that you want to track within your contracts, it’s important to decide who is going to be responsible for monitoring these things. 

While some contract monitoring platforms can help to automate the process, it’s still important to decide who is going to be held accountable for tracking the data contained within reports, and who is going to manage the monitoring process. 

As we mentioned previously, contract monitoring can be carried out by a wide range of different stakeholders. However, it’s important to provide clarity about exactly which aspects of the monitoring are the responsibility of which stakeholders to ensure the contract monitoring process is thorough and accurate. 

3. Centralize your contracts and their data 

Too many legal teams in early-stage businesses understand the pain of uncentralized contracts. Contracts, once signed, are typically scattered across shared drives with inconsistent naming conventions and incomplete excel spreadsheets for contract data

When it comes to monitoring these contracts, it’s hard to know where to begin and what to review. Fortunately, these problems can be resolved by investing in better contract storage or a centralized contract repository

By centralizing your contracts and their data, you can ensure that you’re monitoring the right contracts for the right information. Businesses that use a contract tool like Juro can even benefit from OCR search functionality, making searching through large volumes of contracts for specific terms, types, and parties effortless. 

Once you’ve decided how to store these contracts, make sure to ensure that the relevant stakeholders have access to them. This, again, is made simple with a platform like Juro where users can customize their permission settings contracts. 

2. Find a contract monitoring platform that works for you 

In fact, one of the best ways to make your contract monitoring process more efficient is to automate some of the work. This can be achieved by adopting contract management software with contract reporting as a feature. 

Usually, these tools will analyze your contracts and create customizable contract dashboards to display the data in. This makes the data contained within contracts readily available, easy to visualize and quick to find. 

By automating this analysis and reporting stage of contract monitoring, you can reduce manual contract admin for your team and free up their time for higher-value work. To find out how you can do this using Juro, hit the button below.

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5. Establish routine contract monitoring tasks 

However, even if you do decide to adopt software to help with contract monitoring projects, you’ll still need to review the findings regularly. 

For instance, if you’re tracking missed contract milestones, you’ll likely need to review this on a quarterly or annual basis. But it isn’t enough to simply record the number of renewals you’ve missed, you also need to set aside time to understand why these renewals were missed, and how you plan to resolve this problem in the future. 

Similarly, if you were to look for friction points in your current contract lifecycle, it’s worth looking at how long specific contracts sit with legal for review, or take to get signed. 

A tool like Juro can collate all of this data for you, but recognizing when certain metrics fall short of your expectations and deciding what action to take to resolve this is something you need to invest time and effort into regularly if you want to improve your contract workflow

Top tips for contract monitoring in 2022

Contract monitoring can be a challenge for young businesses, particularly as contracts start to increase. Fortunately, we have a few top tips that will make all of the steps above far easier. 

  • Be proactive: Monitoring contracts to respond to existing issues is essential, but monitoring contracts prospectively is also important, as it helps to prevent issues, rather than wasting more resources to fix them later down the line.
  • Lean on software: For businesses with lean legal teams and growing contract volumes, it simply isn’t feasible to monitor contracts as often and in as much detail as you’d like. By adopting a tool like Juro, you can automate all of the heavy lifting and receive the insights that matter most with minimal manual work. 
  • Don’t leave it to the last minute: We often hear from businesses that are frantically seeking to organize their contracts (and their contracts’ data) in preparation for upcoming due diligence checks. Rather than panicking, establish routine contract monitoring checks now instead of later. 
  • Make someone accountable: As is true with most business projects, making someone accountable for monitoring contracts is one of the best ways to ensure that the task is completed both regularly and to a high standard. 
  • Familiarize yourself with the contract repository: Knowing where your contracts are, how they progress through the contract lifecycle, and how to access them is critical to effective contract monitoring. That’s why you should familiarize yourself with your contract repository early on. 
  • Make changes based on findings: Monitoring your contracts is pointless if you don’t do anything with the findings. If you’re noticing a lot of missed renewals, consider contract reminder software. If you’re finding that contracts are spending a long time with legal in review, consider ways that you can use pre-approved contract templates to cut out this stage for standard contracts

Need help monitoring your contracts?

If you want to make contract monitoring processes more efficient, try Juro. Juro is the all-in-one contract automation platform that enables all teams to streamline the creation, execution and monitoring of routine contracts at scale. Fill in the form below to find out more. 

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