5 major challenges in Contract Management to look out for.

The field of contract management is filled with obstacles that prevent your organization from not only achieving operational efficiency but also results in poor procurement. While some of those obstacles may be minor, others are not only eating away your profits but also lessening the chances for sustainable operation.

Here are the 5 major challenges in Contract Management to look out for –


1. Centralizing the Contracts

As contract managers, it becomes nothing short of a challenge to centralize the Contracts along with relevant documentation, Key Summary and their amendments. While agreements always get defined with a “Fine Print”, it becomes essential that you have access to the required information – with ease and reliability that not only saves time but can also help in your arising Litigations and in negotiations with vendors on Renewal and contract performance

For Business and Legal teams, it is essential that the agreements define the rule of relationship with the Vendors. If the relationship were to go sour, what would happen to with the agreement? It goes without saying, any contract needs to be inside of your contract management system so that there are no doubts about the terms and conditions.


2. Standardizing Contract Language

One of the key benefits of boilerplate language is that it speeds up execution of contracts. However, boilerplate language should be reviewed on a regular basis to make sure that it meets internal and external compliance requirements. Your Standard Contract Templates or Contract Management Solutions with standardized Contract templates and/or Clauses and Terms Library must be revisited every 6-12 months to keep them regularly updated

One important benefit from a robust enterprise contract management system is the ability to handle several contract templates. Unlike paper-based contract management systems, good CLM solutions allows your team to have several different templates and can capture key information fields right from the Business for Pre-Approvals on the Contract Requests before it can be routed to Legal for Drafting. Even more, the system allows managers to assign access to certain templates only to those that really need them. This way any doubt about what is the right template to use is prevented.


3. Keeping Track of Contractual Compliance and High Risk Vendors

This is major issue in government contracts. For example, the Pentagon held back $5.2 million in payments to Boeing after a crackdown on regulation that took effect in 2011 and required contractor to meet standards from internal reporting systems.

Corporates today not only use CLM solution to keep a track of costs but also to track and monitor the Contractual compliances and Vendor Performance based on which contractors are identified as High Risk Vendors and require certain approvals before engaging on a new contract with these vendors


4. Burdening the Legal Team

The Legal team is often centralized and of small number handling multiple requests from business to review and close agreements and almost all the contract requests are marked “URGENT”. This dependency leads to delay and several businesspeople want to circumvent legal review in the contracting process because that step takes too long.

A simple way of reducing the burden on legal team and to reduce the frustrations of clients due to delay is to use pre-defined criterions that trigger business, Compliance and Finance approvals, if required so that Legal has all the necessary approvals and mandated documentation before they go on with drafting the agreement.

Secondly, a dedicated Clauses and Templates Library ensures that standardized language by legal is utilized and changes are effected only when required which can speed up the process for documentation


5. Negotiation and Execution of Contracts via email

Contract Negotiation and Execution can be a major pain point in any contract lifecycle. Printing out and mailing out a contract so that the other party reviews a contract, only to send it back with revisions, is a very inefficient process.

Emailing out contracts so that the other party prints the contract out, either to mail back or email back a scanned copy is not that much more efficient. Your company should either leverage e-signature capabilities of contract management systems or use Online Vendor Portals to allow easy and reliable sharing of Contract Drafts for negotiations.

Furthermore, in case of a deadlock, through manual execution, it always becomes difficult to trace back the necessary approvals that were gathered to push the contract negotiation. With CLM systems, there is a complete trail of history and approvals that are gathered over the Contract Lifecycle and thereby provide clear visibility and accountability into and after the contract has been executed.



Contracts are essential lifelines to any company and much can be leveraged from them. Contracts are not to be defined to escape Litigation but to bring in more value and service to the corporate by tracking their performance and sustainability over the period. By ensuring that the above 5 challenges are resolved an organization can bring in more efficiency and high value to their business processes.

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