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Defining Affective Post-Negotiation Contract Management
Sirion |
January 4, 2024 |

 17,808 total views

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You finished the contract negotiations. You signed the agreement. All processes are up and running. The contract is officially a done deal, right? Not if you want it to be a complete success.

In this often overlooked yet critical post-negotiation (or post-signature) phase lies the true value of your contract. It holds the key to optimizing performance and mitigating risks.

Contracts are a never-ending pool of ongoing data and a continuous source of valuable information. A dynamic data repository can influence strategic decisions and foster a proactive business environment. 

But if you ignore the importance of post-signature contract management, you’re missing out on a chance to extract insights, track compliance, and enhance operational efficiency. In other words, you’re missing opportunities to score some pretty significant wins.

Let’s examine what’s involved in the post-negotiation phase and why it’s critical to a contract’s ultimate success.


What Does Post-Negotiation Mean?

In post-negotiation, a contract’s story comes to life. Each party is now accountable for fulfilling their end of the bargain. It also informs future agreements, making it key to the contract lifecycle. 

This is especially significant for procurement teams since it involves vendor management and information that could improve future contracts.

Elements within the post-negotiation phase include:

  • Storage – Securely archiving signed agreements for easy retrieval and reference
  • Obligation Tracking – Monitoring commitments to ensure all parties fulfill their roles and overseeing corresponding performance metrics and compliance
  • Reporting – Crafting summaries of contract performance, offering a snapshot of successes and areas for improvement
  • Contract Renewals – Strategic checkpoints to decide on continuation
  • Vendor Management – Fostering strong relationships, ensuring seamless collaboration, and potentially setting the stage for future agreements


Where Enterprises Struggle with Post-Negotiation Elements

Post-negotiation insights can offer significant rewards for organizations that master this phase (we’ll examine this later). But there are also risks if it’s not correctly managed. Here is where many companies go wrong: 

  1. Having unknown or unclear contract obligations poses a significant challenge. Organizations may overlook or misunderstand their commitments, leading to disputes and performance gaps. Mismanaged timelines can contribute to chaos, as delayed executions and neglected deadlines strain relationships and compromise objectives.
  2. Not defining contract value is another stumbling block. Organizations often struggle to define and measure the data they need from their contract accurately. This obscures the data’s value and can skew strategic decisions. Then there’s contract visibility – or a lack thereof. Without a clear view of obligations and performance metrics, organizations risk falling short of expectations.
  3. Incompetent reporting can worsen these issues, as poorly communicated insights impede informed decision-making. Without a clear understanding of what worked and didn’t, organizations miss the chance to refine future negotiations and enhance overall efficiency.


Mismanaging the Final CLM Phase

As mentioned, not addressing the above issues can lead to mismanagement of the post-negotiation phase, which brings on multiple risks with far-reaching consequences.

Missteps can result in:

  • Overlooked commitments – Missed timelines hinder service delivery and compromise contract obligations, jeopardizing the overall success of the agreement and leading to legal ramifications.
  • Strained relationships – Vendor management suffers because mismanagement erodes trust and collaboration. Poor communication and unmet expectations strain partnerships, impacting the current contract and future collaborations. 
  • Poor decision-making – The ripple effect extends to intelligence and reporting, where inaccurate or incomplete data compromises strategic decision-making for your business.

Mismanagement risks in the post-negotiation phase can undermine the foundation of successful contract lifecycle management. But, like any phase in the CLM cycle, you can manage them by establishing thoughtful processes and ongoing communication. And the rewards are well worth the commitment. 

Let’s take a look at those below.


Value Behind Strong Post-Negotiation Tactics

On the flip side, a comprehensive post-negotiation management process can provide considerable value to your organization.

It can reduce or eliminate contract value leakage, particularly with supplier management. Ongoing knowledge of what’s in your active contracts will prevent wasting money on redundant vendors or auto-renewing contracts with those that don’t provide sufficient value or live up to their contractual obligations.

Now consider your revenue. With strong post-negotiation tactics, you won’t have to worry about losing revenue because you failed to fulfill contractual obligations or renew contracts before their deadlines. Then, there’s the issue of regulatory compliance. You’ll avoid being hit with fines or sanctions if a contract violates new regulations.

Also, because contract management is a lifecycle process, post-negotiation is preparation for renegotiation or contract renewal. Acing this phase could bring:

  • More informed procurement. You can correlate contractual terms with actual consumption to make evidence-based volume adjustments.
  • Increased purchasing power. You’ll have time to compare current vendors with alternatives and try to negotiate better terms before deciding whether to renew or switch.
  • Better leverage. With contract performance insights, you can demonstrate to customers how well you’ve performed to renegotiate better terms or upsell.

Finally, consider the benefits of powering up manual contract management processes with data automation and contract AI. Beyond eliminating the errors inherent in manual processes, you’ll also be able to take advantage of the insights your contract data can reveal. 

Plus, you’ll never have to worry that the contract analytics you rely on for revenue and budget forecasting are inaccurate or out-of-date.


How to Set Up a Winning Post-Negotiation Process Using Contract AI

An AI-powered platform can add new visibility, efficiency, and effectiveness levels to your CLM processes. But what steps should you take for successful implementation? 

Here are the primary stages you’ll want to integrate into your processes.

  1. Digitize your contracts. Store them in a secure, centralized repository for easy access.
  2. Set up a custom dashboard for contract tracking in real time. Add at-a-glance features for quick review.
  3. Build obligation schedules. Set up auto-notifications so stakeholders know when they need to take action.  
  4. Analyze account performance and contract value. Leverage AI’s power to maximize the benefits and insights drawn from data analytics.
  5.  Monitor and enforce compliance. Stay vigilant about changing regulations that could affect contract terms.


Keep Contracts Alive Post-Signature with CLM

Contract lifecycle management is an ongoing process, as each phase sets a foundation for what you can achieve with the next phase. Even the post-signature phase – the last phase of contract negotiations – offers important insights and sets the tone and foundation for ongoing business relationships and contract renewals.

But what about the other phases? We’d love to show you how they all work together. Learn more about the pre-negotiation and negotiation phases in this report

Author: Sirion

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