How can you prioritize contracts for review and approval?

Para priorizar contratos para análise e aprova??o de forma eficaz, é fundamental estabelecer critérios claros baseados em urgência, valor financeiro, risco legal e impacto operacional.

Contract prioritization transcends mere urgency criteria. It necessitates an evaluation from the vantage point of business value and contract materiality. Consider constructing a contract materiality matrix, which allocates precise values and weights to several factors. These factors include the contract’s monetary worth, legal risks, as well as the strategic significance of the counterparty. Additionally, account for the risks associated with potential losses and market concentration posed by this third party.

To assess urgency effectively, consider factors such as deadline proximity, business impact, legal compliance, client needs, risk exposure, operational dependencies, resource availability, and stakeholder communication. Prioritize contracts with impending deadlines, significant business impact, legal or regulatory requirements, critical client or supplier needs, high-risk exposure, operational dependencies, limited resources, and stakeholder input to ensure timely review and approval.

To review risks effectively, identify potential risks across financial, legal, operational, and reputational aspects. Assess their probability and impact, prioritize them based on severity, and ensure compliance with laws and regulations. Mitigate risks through contractual safeguards, contingency plans, and ongoing monitoring. By systematically addressing risks, organizations can protect their interests and ensure successful contract outcomes.

Consider stakeholders by identifying all parties involved, understanding their interests, engaging them early, communicating effectively, addressing their needs, managing expectations, seeking buy-in, and following up for feedback. By involving stakeholders throughout the process, organizations can enhance collaboration, minimize resistance, and increase the likelihood of successful contract outcomes.

Based on my one decade long experience in contract management automation, to prioritize contracts for review and approval with automation you need to consider the following steps: Check your blind spots: Identify areas in the contract lifecycle that may benefit from automation and are prone to delays or errors. Assign detailed responsibilities: Clearly define roles and responsibilities for each stage of the contract review process to ensure accountability. Choose an automation tool: Select a tool that fits your organization's needs and can integrate with your existing systems. Make it your own: Customize the automation tool to align with your company's specific contract review workflows and approval hierarchies.

Automating the contract review process streamlines workflows, reduces errors, and enhances efficiency. Use document management software for centralized storage and retrieval. Develop standardized templates for easy customization. Implement workflow automation to route contracts for review and approval. Adopt electronic signature solutions for remote signing. Utilize compliance monitoring tools and contract analytics software for insights. Integrate contract management software with CRM and ERP systems for seamless data exchange.

Monitoring contract performance involves establishing KPIs, conducting regular reviews, utilizing contract management software, benchmarking, ensuring compliance, gathering stakeholder feedback, generating performance reports, and driving continuous improvement. By tracking progress, identifying areas for improvement, and addressing issues proactively, organizations can optimize contract outcomes and enhance overall effectiveness.

I believe Category management is crucial as organizations value contracts differently, hinging on key elements. Identifying which factors—be it risk, profitability, or fixed revenue streams—are most impactful allows for prioritized contract reviews and decisions. For example, contracts leading to market expansion may be prioritized for some companies. Therefore, developing a matrix that evaluates these elements is vital for strategic review and prioritization, ensuring that decisions align with the company's objectives and risk appetite.

In addition to monitoring contract performance, consider risk management, contract renewal strategies, supplier relationships, technology adoption, legal compliance, training programs, performance incentives, and feedback mechanisms. These factors enhance contract management practices, drive efficiency, and improve outcomes for organizations.