Do you have insight and overview of your contract management and compliance?

Your company makes contractual agreements with partners (customers, employees and suppliers) from which you can derive rights and from which you have obligations. The management wants an overview and insight into:

  • the rights and how much of the rights has been used; and
  • obligations and what remains to be fulfilled.

Top management is responsible for organising compliance with contractual obligations. We can also view this responsibility as achieving business objectives and managing cost and liability risks.

For the desired overview and insight into the contractual positions of a company, a systematic recording of the rights and obligations entered into is necessary. This issue is central to the organisation of legal operations. When a company organises legal operation, there is certainty about the contract agreements, identities and reliability of partners and the tasks and responsibilities of department teams for managing the agreements made.

Compliance ensures that the agreements made are managed effectively, so that the business objectives are achieved and the cost and liability risks are limited and made manageable. Compliance operations poorly or even not at all if there is no systematic recording and management of contractual agreements (the rights and obligations of the company).

Compliance operations, in consultation with the legal operations and department management, will organise contract management with a tailored compliance approach and internal control measures. MYOBI has taken such an approach with us for compliance with the TTP policy, in particular the TTP Code of Conduct GDPR.

How can we help you?

Do you have questions about organizing, implementing or expanding your business (compliance) function? Our service owner, Caroline Willemse or her colleagues, would be happy to discuss your specific case.

Organisational objectives are aimed at optimising business activities, increasing turnover or realizing cost savings. Monitoring contractual relationships with partners is an essential part of this. We make a few comments about contracts that are used for business activities:

  • Sales: More products and services are provided than for which fees are paid;
  • Human Resource Management: The liability and cost risks increase if employees become ill and no longer function properly in their positions. It is essential for the organizations that the agreed processes and procedures are followed with regard to functioning and illness; and
  • Procurement: purchasing products and services entails rights that the suppliers promise to fulfill effectively and places (payment) obligations on the company. It is essential that there is periodic monitoring of the use of the rights and the fulfillment of the obligations.

In short, we observe that companies lose revenue or pay for products and services that are not used or delivered.

The purpose of contract management is easy to understand, but organizing can take a lot of effort. This contradiction arises because it is not clear who is responsible for managing the contract arrangements. The first step, in collaboration with employees of the corporate legal function and management, is to put together an awareness and knowledge program with the aim of informing employees and management step by step about the added value of contract management for directing their business activities.

If the employees are prepared to apply contract management, the following steps can be taken.

The management wishes to know the partners with whom contract agreements have been made. A good start are the debtors from whom money has been received and the employees and creditors to whom money has been paid in the past year. Thereafter:

  • We make an inventory of the contract agreements in collaboration with the department teams. These activities actively support the company with an information ecosystem on the MYOBI Trust Network and the smart contracting application;
  • Assessing the collection of contract agreements can lead to the compilation of a company-specific contract library; we could see such a portfolio as a baseline. The agreements concluded may be outdated and no longer comply with the law, the agreements may be loss-making for the company or contain unwanted liability risks. We formulate advice on the status of the contract agreements;
  • If desired, follow up the advice on the status of the contract agreements and process it in the contract administration. Talks with the necessary partners will be necessary to conclude the agreements made or to terminate the contractual relationship. The rights and obligations of the partners included in the contract administration have been made explicit and manageable;
  • Make agreements about contracting scripts and contract management. This is an activity that can be completed from within the corporate legal function. In addition to contract types, it is necessary that specially trained employees know and are able to implement the scenarios for making and managing contract agreements;
  • Investing of contract management in the department teams. Different contracts and scenarios apply to each team. Up to a certain level, employees can make adequate agreements with partners. Outside of their competence, it is wise to seek the help of an expert. We implement the entirety of contracts and scenarios in the organization of business activities; and
  • Prepare internal control protocol. Contract agreements can have far-reaching consequences for the company (for example, sales of services or employment contracts). Other less. We take this into account in the internal control protocol during the periodic monitoring.

For any organisation, regardless of the company size, it pays to set up a corporate legal and corporate compliance function and to perform regular internal audits on contract management.

What will it ultimately yield?

Contract management delivers revenue and operational cost savings. The added value varies depending on the compliance periodicity. The added value increases with less tangible control of cost and liability risks. This also applies to the more effective organization of business activities.

Do you have questions or need an appointment?

Do you have questions about organizing, implementing or expanding your compliance operations? Our service owner, Caroline Willemse or her colleagues, would be happy to discuss your specific case.