How to Monitor Contracts in Business

A legal review of contracts should be performed before finalizing terms.
A legal review of contracts should be performed before finalizing terms. (Image: Jupiterimages/BananaStock/Getty Images)

Contract management can be a tedious but essential part of conducting business. Ensuring adherence to contractual terms, limitations and deadlines helps maintain a positive relationship between companies, increases customer satisfaction and minimizes financial penalties. Contracts may be simple agreements with a customer or large obligations with government agencies. Regardless of the size or scope of the contracts, you must understand, review and monitor contacts to meet legal and professional stipulations. Contract monitoring should occur before, during and after the contract period.

Review the contract with legal personnel that understand your business and industry. The lawyer you use can be on staff, or from a firm you hire specifically for contract reviews. Request a comprehensive analysis to ensure the limits of the contract, your obligations and any legal complications that could arise due to the language of the agreement.

Create an outline of contract requirements. These outlines should list dates, requirements and the basic obligations of the business agreements. Use these review guides to disseminate contract information within your company to employees who will be affected by the contract. Ensure contractual understanding for additional monitoring resources within your company.

Establish a monitoring system for contracts. If you work with multiple contracts simultaneously, you may need specialized contract management software. If you are in charge of one primary contract, you may be able to use general productivity suite software. Consider calendar, communication and project management software tools. Select the system that simplifies the contract management process and fits within your budgetary constraints.

Add initial information into the contract system you selected. Insert reminder dates for contract milestones and deadlines onto your calendar. Establish reminder emails to workers and set up project time lines and requirements as appropriate.

Set up routine meetings or review sessions with stakeholders to track the contract's progress. These meetings may be informal status checks or formal reviews with presentations. The type and scope of the meetings should be dictated by the complexity of the project, your internal management needs and the client’s expectations.

Facilitate reports, payments and communications among all parties. Ensure all terms are met exactly and are on schedule for any deadlines. You may need internal and external reports to ensure that all workers, contractors and the client effectively work together.

Review client satisfaction with the contract and your company’s performance. If the contract is renewable, multiple satisfaction checks should be performed throughout the contract period. Send surveys or conduct interviews with clients. If possible, establish a statistical method of evaluating satisfaction between contracts and clients.

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