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:
- Contract managers: Contract managers are often responsible for overseeing contracts and are therefore tasked with monitoring their progress and fulfillment. Contract specialists and contract administrators typically also fall within this category.
- 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.