A contract review checklist is a critical component of any vendor management program. Many organizations, however, struggle to manage the due diligence, sign-offs, and employees involved in a vendor contract review. One of the first obstacles is funding. Devoting employees to contract management is a costly but important delegation of resources, and hiring consultants (like lawyers) is simply expensive. Furthermore, the “old-fashioned” way of managing contracts — going through individual line items, determining which are pertinent, and submitting them for another review — is slow and all-too-vulnerable to human error.
What contributes to the traditional approach’s inefficiency? When various departments are involved, like IT security, compliance, and finance, it can be laborious to develop efficient workflows and communication about a vendor. Finance may work on budgetary matters, compliance may check certain requirements are met, and IT may conduct an in-depth technical review of the vendor’s suitability. Oftentimes, two or more departments are collecting similar or overlapping information. In other words, traditional contract management 1) Trusts the initial review to as few as one or two employees, and 2) fails to ensure various departments are properly in touch.
In combination, these shortcomings can be very dangerous. While on-boarding new vendors or reviewing existing ones, it is critical to both bridge silos and ensure each contract meets all applicable standards, guidelines, and requirements. The best way to do this is with one centralized platform. Liabilities related to contract mismanagement are manifestations of risk. For this reason, the best way to prevent mismanagement is centralize your content review processes, standardizing them and structuring them around the same framework that supports all your processes, no matter which department heads them.
Developed as a review tool to aid in all contractual due diligence, LogicManager’s contract review checklist covers the review, approval and signing processes. Simplifying the process of managing various due diligence reviews across departments, this checklist will provide your organization with process efficiency and the security that all requirements are being met:
The contract review checklist operates with an “if, then” functionality, so if you answer “yes” to any of the above items, cascading fields will expand and take you through the details of each. For example, if the party responsible for the contract checklist marks “yes” for “Term / Renewal,” he or she will then be able to indicate when the renewal takes place and create an automated alert for a chosen time. This is where LogicManager’s enterprise-wide approach becomes more apparent; in addition to evaluating contracts on a common platform, employees can push related concerns to the appropriate department. This links your contract review processes to other, broader processes, like vendor management, business continuity, compliance management, and enterprise risk management.