Each day across all industries, including marketing research and analytics, companies spend thousands of hours and millions of dollars negotiating deals and sweating over minute details in the terms and conditions of the final contract.

But what happens next? Too often, on both the buy and sell side, there is a drop off in attention to the contract stipulations — as if the finish line has been crossed. But in many ways, the effort is just beginning.

Contract Lifecycle Management is a concept that is widely known and discussed, but shockingly ignored. Companies frequently neglect to put in place virtually any controls for the active contract and fail to manage the contractual obligations agreed to during the negotiation phase. This failure leaves them exposed to substantial risk and lost profit. The tracking and compliance of Contractual Obligations is an important part of the comprehensive ISO 27001 Information Security standard.

Why the Failure? It Takes Effort

The general purpose of contracts is to define the business relationship between parties and to set the parameters for how the parties will conduct business. The permutations of these relationships are endless and varies based on industry vertical, geography, regulatory environment, and virtually any number of individual business requirements. There is no one-size-fits-all definition for any of them. Contents of the contract might include delivery terms, information security considerations, insurance parameters, milestone dates, service levels, discounts, penalties, warranties or virtually anything else the parties feel is relevant to their relationship or specific transaction.

From an impact perspective, failure to meet these obligations can result in missed savings, heavy fines, costly litigation, broken relationships, supply chain gaps and lost customers, just to name a few. Based on the possible consequences of not managing contractual obligations, both made by your suppliers and that you have made to your customers, it is shocking how few companies proactively manage their contracts. Therefore, companies that want to help maximize savings, increase revenue, mitigate risk and maintain positive relationships with their client’s and business partners realize the importance of obligation management.

In concept, obligation management is simple: Proactively manage the terms of a contract over its lifetime. Execution, however, is much more difficult. This is due to the decentralized nature of contracting and the long lengths of contracts.

Learn More - Join us on June 28 from 2-2:45 p.m. for the webinar, “Compliance - Meeting your client’s contractual obligations” for best-practice guidance on how to best approach this important but often-overlooked task.