Picture trying to keep dozens of spinning plates from crashing to the ground. It’s a daunting task. Now, think of each plate as a contract crucial to your business’s success. Keeping them all in motion is no small feat, and that’s where a skilled contract manager comes in.

Contract management is at the heart of every business transaction. You deal with contracts daily, whether with vendors, customers, or employees. Managing these contracts effectively is crucial to ensuring that your business operations run smoothly and that you avoid unnecessary risks.

Understanding the roles and responsibilities of a contract manager is vital, especially for in-house legal counsel. You need to know what to expect from a contract manager and how to support them in their role. This knowledge ensures that contracts align with your company’s goals and legal requirements.

The demand for skilled contract managers is growing. Research from the World Commerce & Contracting Association shows that poor contract management can cost companies up to 9% of their annual revenue, and on large projects, this figure can be as high as 15%. Improving contract management practices can lead to significant cost savings and better profitability for businesses.

In this article, we will break down the key responsibilities of a contract manager and explain why these roles are so important for your business.

What is a contract manager?

A contract manager is a professional responsible for overseeing the entire lifecycle of contracts within an organization. This role includes drafting, reviewing, negotiating, executing, and ensuring compliance with contractual agreements. Contract managers work to minimize risks, ensure that contracts align with business goals, and manage the relationships between parties involved in the contracts.

The significance of contract management in different industries

Contract management is essential across various industries, ensuring that agreements are properly executed and risks are minimized. In sectors like construction, technology, and legal, the complexities of contracts demand meticulous oversight. Each industry faces unique challenges, making effective contract management a key factor in ensuring successful outcomes, compliance, and risk mitigation.

Also read: Why Contract Management Is Important

Construction:

In the construction industry, effective contract management is vital due to the complexity of projects and the involvement of multiple stakeholders. Contract managers ensure that all parties meet their obligations, timelines are adhered to, and any changes are managed properly to avoid disputes and cost overruns.

Technology:

‍ In the tech industry, where software licenses, service agreements, and intellectual property rights are critical, contract managers help manage these complex agreements, ensuring compliance and protecting the company’s assets.

Also read: SpotDraft for FinTech Businesses

Legal:

Within the legal sector, contract management is key to maintaining compliance with laws and regulations. It ensures that all contractual obligations are met and that the firm or its clients are not exposed to unnecessary legal risks.

Also read: The Co-Pilot for Legal Teams

Skills and qualifications required for a contract manager

To be a successful contract manager, you need a mix of essential skills and the right qualifications. Let’s break it down.

Essential skills:

• Strong negotiation abilities: You’ll often find yourself at the negotiating table, trying to secure the best deal for your organization. It's about balancing what your company needs with what the other party is willing to offer.
• Attention to detail: Contracts are full of fine print. A small oversight can lead to big problems, so being detail-oriented is a must.
• Communication and interpersonal skills: You’ll be talking to people a lot, whether it's explaining contract terms to your team or negotiating with external partners. Being able to communicate clearly and build relationships is key.
• Problem-solving and analytical thinking: Things don’t always go as planned. You’ll need to think on your feet and come up with solutions that keep the project on track.
• Understanding of legal terminology and concepts: While you don’t need to be a lawyer, having a solid understanding of legal terms will help you navigate contracts more effectively.
• Project management skills: Managing contracts is a lot like managing a project. You’ll need to keep everything organized and ensure deadlines are met.
• Financial literacy: Contracts often deal with things like budgeting, cost analysis, or managing financial risks. So, it’s key to have a solid grasp on the numbers.

Qualifications:

• Relevant educational background: Having a degree in something like law, business administration, or supply chain management can give you a solid foundation to build on.
• Certification programs: If you want to stand out, certifications like the Certified Professional Contract Manager (CPCM) can give you that extra edge and show you’re serious about your career.
• Experience in related fields: Experience in areas like procurement, legal, or project management can be a big plus. It gives you practical insights and skills that are directly transferable to contract management.

Also read: Top 10 Contract Management Skills to Master in 2023

Responsibilities of a contract manager

As a contract manager, you play a vital role in your organization's success by overseeing the entire lifecycle of contracts. Your responsibilities include drafting, negotiating, and managing contracts, ensuring they align with legal requirements and organizational goals.

#1 Negotiating terms that benefit everyone

When you're drafting and reviewing contracts, accuracy and clarity should be your top priorities. The language in these documents needs to be precise to avoid any misunderstandings down the line. It’s also essential to make sure every contract complies with legal and regulatory requirements. This protects your organization from potential legal trouble and also ensures that all parties are on the same page from the start.

Also read: Revolutionizing Contract Review with AI and Manual Validation

#2 Managing the contract from start to finish

Negotiation is where your skills truly come into play. It’s about balancing what your organization needs with what the other party wants. Your goal isn’t just to reach a quick agreement, but to secure terms that benefit your organization. This could involve discussing pricing, timelines, or specific deliverables. The key is to ensure that both sides are satisfied while making sure your organization gets the best possible outcome.

#3 Managing the contract lifecycle

Managing the contract lifecycle means overseeing everything from execution to performance and compliance. You’re the person who makes sure that what’s written in the contract actually happens in practice. This involves monitoring milestones, ensuring obligations are met, and stepping in quickly if issues arise. It’s a continuous process that requires attention to detail and a proactive approach to problem-solving.

Also read: Contract Lifecycle Management Process: All You Need to Know

#4 Ensuring compliance and managing risks

Compliance and risk management go hand in hand with your role. You need to constantly monitor contract adherence to avoid any breaches. But it doesn’t stop there. Identifying and mitigating risks associated with contracts is crucial. By staying ahead of potential problems, you protect your organization from financial and legal consequences, keeping everything running smoothly.

Also read: What is Contract Compliance? The Ultimate Guide - SpotDraft

#5 Keeping organized records for easy access

Keeping detailed records is an important part of your job. Every contract and document needs to be organized and easy to find. It ensures that anyone who needs information can get it quickly. Clear records also help with transparency and making better decisions.

#6 Collaborating with key departments

Finally, collaboration is key. You work closely with teams like legal, finance, and procurement to make sure that contract terms align with the organization’s goals. This teamwork ensures that the contracts you manage meet legal and financial standards and also support your organization’s broader strategic objectives.

Challenges faced by contract managers

Contract managers play a crucial role in ensuring that contracts are well-negotiated, compliant, and effectively managed. However, they face several challenges that can complicate their work. Let’s explore some of these key challenges.

#1 Handling complex negotiations

One of the biggest challenges for contract managers is handling complex negotiations. Balancing the interests of multiple parties while ensuring compliance with legal and organizational standards is no small task.

For example, in a multinational software company, contract managers must often navigate complicated licensing agreements that involve numerous stakeholders, each with their own interests. The difficulty lies in finding common ground that satisfies all parties while still protecting the organization's interests and staying within legal bounds.

#2 Keeping up with regulatory changes

Staying updated on legal requirements and industry standards is another significant challenge. Regulations can change frequently, and what was compliant yesterday might not be today.

For instance, in highly regulated industries like healthcare or finance, new laws or guidelines can emerge rapidly, requiring contract managers to quickly adapt their processes and ensure all contracts remain compliant. Failing to do so can result in legal penalties or financial losses for the organization.

#3 Managing multiple contracts

Contract managers often juggle numerous contracts simultaneously, each with its own set of terms, deadlines, and stakeholders. This can be overwhelming and requires exceptional attention to detail.

For example, a contract manager in a large construction company might oversee contracts with subcontractors, suppliers, and clients, all while ensuring that each contract aligns with project timelines and budgets. The sheer volume of contracts can make it difficult to maintain accuracy and ensure that all terms are met.

Also read: Sending out Multiple Contracts with SpotDraft Campaigns

Tips for contract managers

#1 Communicate effectively to keep stakeholders aligned

Clear communication is crucial in contract management. You need to set expectations with stakeholders early on and provide regular updates to keep everyone informed. Use simple language to avoid any misunderstandings.

Tools like email templates and project management software can help streamline your communication. In fact, 74% of recruiters believe that proficiency in these tools is a key skill for job candidates.

#2 Continuously learn to stay ahead of industry trends and legal changes

Staying updated on industry trends and legal changes is essential. Subscribe to legal newsletters, join webinars, and take relevant courses. This helps you stay informed about any changes that could impact your contracts.

#3 Build strong relationships with clients and vendors

Building and maintaining strong relationships with clients and vendors is key to successful contract management. Be responsive and transparent in your interactions. Regular check-ins can help maintain trust.

#4 Manage your time effectively by prioritizing tasks and using tools

Time management is critical when handling multiple contracts and deadlines. Prioritize your tasks based on urgency and importance. Use calendars or task management apps to keep track of deadlines and responsibilities.

A day in the life of a contract manager

• Starting with a morning check-in: The day kicks off with a detailed review of ongoing contracts. The contract manager checks for any upcoming renewals, ensures deadlines are on track, and sets their priorities for the day.
• Collaborating with the team: Morning meetings are essential. The contract manager meets with internal stakeholders to discuss contract requirements and alignment. They also spend time negotiating terms with external partners to secure favorable agreements.
• Focusing on document accuracy: In the afternoon, the contract manager dives into reviewing contractual documents. Ensuring every detail is accurate and compliant is crucial, and they often collaborate with the legal department to handle complex issues.
• Addressing industry-specific needs: For those in specialized fields like construction or IT, additional time is spent on understanding and managing industry-specific contractual provisions and regulations, making sure all contracts meet these unique requirements.

How can contract management software help?

Contract management software can make your daily work much easier. It helps by taking care of repetitive tasks, keeping everything organized, and making sure you stay compliant. Here’s how it works:

• Automation of repetitive tasks: The software takes over the routine tasks like drafting contracts, storing them, and keeping track of deadlines. This saves you time and reduces the chances of mistakes.

Also read: End-to-end contract automation software for legal teams

• Improved accuracy and compliance: You don’t have to worry as much about errors. The software has built-in compliance checks that ensure your contracts meet legal requirements.

Also read: SpotDraft Reduces Risk For Legal Teams While Enhancing Accuracy

• Centralized document management: All your contracts are stored in one place, making it easy to find and manage them. You always have the most up-to-date version at your fingertips.

Also read: Organize your contracts in a searchable repository

• Risk management and reporting: The software helps you spot potential risks early by generating reports on any issues. This way, you can address problems before they get out of hand.

How SpotDraft helps contract managers

SpotDraft is a leading contract management software designed to simplify and streamline the entire contract lifecycle. It’s built to help legal teams and contract managers automate their workflows, ensuring that contracts are handled efficiently and with minimal risk.

Key features

SpotDraft offers a range of powerful features, including:

• Automated contract drafting: SpotDraft automates the creation of contracts, reducing the time spent on manual drafting and minimizing errors
• AI-powered insights: The software provides AI-driven insights, helping you make informed decisions by analyzing contract data‍
• Seamless integrations: SpotDraft integrates smoothly with tools you already use, such as CRM systems and communication platforms, making it easy to incorporate into your existing workflow

Also read: CLM integrations for efficient teams - SpotDraft

SpotDraft also provides valuable career information and resources for aspiring contract managers. These resources can help you stay updated on industry trends, develop your skills, and advance your career.

Ready to experience the benefits of SpotDraft firsthand? Try the demo today and see how it can transform your contract management process and support your career growth.