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9 Essential Skills For Contract Management

9 Essential Skills For Contract Management

Contract management is crucial for the success of any business that deals with third parties. It’s the key to making sure that mutually beneficial arrangements are created and that the terms of these contracts are adhered to by everyone involved. It can also be extremely complex. This is why contract manager roles require a varied skill set to deal with all the challenges involved.

As well as soft skills like communication and organization, contract managers also need expert knowledge of the legal and regulatory frameworks surrounding contracts. They also need the ability to work productively with many different parties, both internally and externally.

Whether you’re just starting out in contracts management or an established manager looking to improve your skill set, here are some of the most important contract management skills.

1. Attention to detail

One of the most important contract manager skills is attention to detail. Contract management involves processing a lot of information quickly and effectively, so being able to spot discrepancies, mistakes, and problems is essential.

As well as all the communications surrounding a contract, particular attention needs to be paid to the contract itself to make sure it’s watertight. Contract managers need to pick up on grammatical errors or typos that could obscure or change the meaning of a clause; check that any stats, numbers, and projections are correct; and ensure that no clauses contradict each other.

Contract managers should also look beyond what’s in the contract to what isn’t in the contract. Does it cover all eventualities? Has anything been missed that could cause problems later down the line? Make sure that the contract thoroughly covers any situation that could arise.

2. Listening and communicating

There are all manner of individuals, departments, and third parties involved in contract administration. It’s vital to be an effective communicator and ensure that you form productive working relationships with all of them.

Pay close attention to different parties and consider their needs and perspectives thoroughly. Internal stakeholders, key suppliers, and external contract partners all need to have their needs represented in the contract in question. Carefully listening and communicating with everyone involved is therefore essential to successful contract management.

Active listening is a particular skill that contract managers should deploy when dealing with other parties. Use body language, affirmation, and other ways to signal to the other party that you are listening to what they say and taking it all on board.

3. Knowledge of the contract lifecycle

Contract lifecycle management is a vital aspect of contract management as a whole. It’s important to have a full understanding of every stage, from initiation, negotiation, and execution to performance monitoring, renewal, and termination.

Keep up to date on best practice for each individual stage, and position yourself as a point of contact for all parties throughout the process so that you can gain a full oversight of the contracting process. You should also keep updated on any new CLM solutions, techniques, and tools that may emerge that can help to stream your contract lifecycle management processes.

If you’re new to the sector and lack contract manager experience, it may be helpful to undertake some formal training to fill in any key contracts skills gaps you may have. These may be provided as part of your organization’s career development services, or you may be able to find some great online courses that will help you get up to speed in no time.

4. Legal and financial know-how

Contracts are intimately linked to the legal frameworks that surround them. As a result, contract managers need to have a working knowledge of contract law and the law in general.

You need to be able to recognize any loopholes, contradictions, or legal oversights in any given contract. You also need to be aware of anything that might constitute a breach and the principles of liability that govern the repercussions of these breaches.

Finally, you need to be able to cast an expert eye over contracts before they are signed to ensure that they follow all the necessary legal frameworks to be legally binding. Bear in mind you don’t need all the answers all the time. If in doubt, seek in-house counsel from your organization’s legal teams.

Since part of the role of contract manager is also to ensure that contracts are financially viable and beneficial for your organization, financial knowledge is also important. Having good financial analysis skills means you can keep costs low for both your own organization and other parties.

5. Ethics, compliance, and regulation

Another essential aspect of contract management is minimizing contract risk from compliance and regulatory issues. You need a solid awareness of the regulations surrounding your business’ industry, as well as the regulatory frameworks that manage contracts and business dealings more generally.

Working to keep all contract processes above board minimizes any compliance risks to your organization, ensuring they won’t face fines or reputation damage from breaching any rules. This involves overseeing the actions of everyone involved in the creation and execution of a contract to ensure everything stays above board.

More generally, you should also work to maintain proper ethical standards throughout the contract lifecycle. Avoid and discourage any off-the-record meetings or negotiations that might compromise the ethical standing of contracts, and advise and guide your colleagues and other parties to maintain ethical standards.

Finally, contract managers need to make sure they keep comprehensive documentation. This safeguards your organization against any risk from inspections by auditors or regulatory bodies, as you’ll be able to show thorough evidence that you’ve followed all necessary contract laws and regulations.

Particular areas of regulation that you should be aware of are data protection, import and export regulations, tax law, and anti-bribery/anti-corruption statutes. If your business deals with overseas clients or suppliers, make sure you know the relevant international regulations as well as domestic ones.

6. Organization and adaptability

Contract management requires that you’re fully prepared at all times. The workload can often be heavy and unpredictable, so the more preparation you do ahead of time, the better equipped you’ll be to complete your work.

Because problems are bound to arise at some point or other, you also need to remain adaptable in order to solve these problems. Engage in both proactive and reactive problem solving — proactively creating plans for anticipated issues; and reactively working to mitigate and solve unexpected ones.

7. Innovation and technological implementation

Contract management involves a lot of repetitive manual processes and administrative tasks, so an effective contracts manager will work to find ways to streamline these workloads and maximize efficiency.

Making use of tools like artificial intelligence, machine learning, automated contract management software, and cloud contract repository solutions will help to automate and streamline your contract management system and processes. These tools will allow you to save time on small repetitive and time-consuming tasks. As a result, your business efficiency will drastically improve for your business.

Innovation also means streamlining the ways that contract management personnel interact with processes and people in other departments of your organization. Finding ways to integrate and centralize cross-department processes can make it easier to keep everyone on the same page when it comes to contract management.

8. Analysis and performance measurement

It’s important to know when contracts are working and when they aren’t. This is why it's always a good idea to monitor and measure success. You can begin by working to establish key performance indicators and continuously monitor them to make sure they’re being met.

Contract managers need to understand whether a contract is being carried out effectively and recognize when they need to take action to improve performance. There’s a lot of information to handle during the contract management process, which is why contract managers need to have strong analytical skills to make sense of it all and ensure that the best outcomes are being realized.

9. Conflict resolution

Disagreements are bound to occur at some point during the contract lifecycle, so a good contract manager needs to be able to resolve these conflicts effectively in order to avoid any issues.

Conflicts can arise during negotiations when different parties disagree over the terms of a contract, or during the execution of a contract if any party believes that another has not met their contractual obligations.

Contract managers need to work with all parties concerned to resolve these conflicts and find a mutually beneficial outcome. Communication, listening, and interpersonal skills are important here, but so is your ability to approach these conflicts calmly, sensitively, and professionally.

Legal action should be avoided wherever possible, as it can be a very costly process, and may lead to reputational damage for your organization if it is the side considered to have breached the contract.

Listen to and understand all perspectives surrounding a conflict, then work to engage in a collaborative resolution process to create a middle ground that works for all involved. Doing so is one of the major contract manager challenges, but is vital to avoid damaging outcomes and preserve business relationships.

These are some of the most important skills for contract managers. But this is just scratching the surface. Since it’s such a complex sector, there are numerous other contract management strategies and skills that are essential to successful contract managers. To get the best results for your organization, consider dedicating time to expand, develop and hone in on your skills.

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