Drafting a business contract is a process that can be time-consuming. This process requires meticulous attention to detail, patience, and negotiation skills. And even after agreeing, the work isn’t near completion just yet. In fact, it just began.
As soon as the contract is signed and both parties have agreed, the focus then shifts to doing everything in your power to ensure proper compliance with the terms and conditions stated in the contract.
In this article, we will be focusing on contract compliance and showing you the best practical tips to ensure that your business is kept in line.
Introduction to Contract Compliance
Now that you have signed a deal and the inks on both documents are dried, it is time to administer the contract and comply with its terms; this is called Contract Compliance.
Defining contract compliance, Rod Linsley who writes for Gatekeeperhq.com claims contract compliance is a strategy whose primary focus is to ensure conformance with the regulations and performance of obligations within a contract. Writing further, Rob claims it is a practice that checks to make sure that all parties involved in an agreement carefully follow through as they agreed in a manner that is considered legal.
This seems to be the most accurate definitely of contract compliance we have seen on the internet. Contract compliance then simply means the total observance of the norms and procedures highlighted in a contract. This often involves a periodic review of existing contracts to determine abidance to mandates and protocols stated in a contract deal.
Take marriage, for instance. At the altar, vows are exchanged, and promises are made to keep those vows. The process of keeping to those promises and vows made to each other is what is known as compliance.
Whatever the case may be, be it marriage, business, or any agreement at all, compliance should always be the number one priority after having a contract; your integrity will be at stake if you don’t.
The best contract compliance practices
It is essential that you properly manage your contract(s) with total compliance in mind. If not, you risk losing a contract renewal with your partner.
Below are five of the best practices to ensure contract compliance in your business:
- Set Goals and Metrics: Back to our marriage example, you can view your marriage vows in one of two ways, the first as a strict obligation that you must fulfill, while the second as an excellent opportunity to practice faithfulness and achieve desired goals with your spouse. Which do you think will be the most exciting and beneficial to try out? Well, yes, you guessed right!
The same applies to business. Compliance in the business industry shouldn’t be boring or seen as a mere contractual obligation. Instead, it should be viewed as an opportunity for you to reach a goal and keep to a promise. 9 out of 10 people who set goals are more likely to achieve them.
So set goals that fulfill the purpose of the contract, afterward, develop some metrics(standard of measuring your goal) to help you meet them. - Use Contract Management System: In our world today, technology can now take care of the more tedious aspects of contract management, which automatically facilitates contract compliance. Therefore, it would be best if you took advantage of this opportunity.
One of the best ways to ensure that your business is keeping to its end of the bargain is applying a comprehensive contract management system. This will help you stay organized by keeping all your contracts in one place and ensuring that you are delivering on all your contractual obligations. - Specify roles and responsibilities: Contract compliance is not a one-man’s job; it is a collective job for everyone involved. Hence, to make certain that your people follow through on their roles and responsibilities, you need to be very clear on what those look like. So clearly state at the beginning all that is required of each person.
If your expectations aren’t clear enough, roles aren’t adequately elucidated, or your communication is ineffective, you may be putting your business at the risk of non-compliance or breach of contract. - Regularly Evaluate your compliance: To comply with contractual obligations and ensure nothing is overlooked, regular auditing has to be implemented. Creating a schedule for routine contract audits is a brilliant strategy to identify sources of any non-compliance in your organization.
Regular contract auditing saves you time, effort, and money because you get to correct a mistake before it is ever made. It will also help you identify possible gray areas in your contract and develop means to improve clarity and avoid costly mistakes. - Always Keep up with changes: The world of business as we know is anything but stagnant. Consequently, it would be best if you always tried to remain apprised of pertinent changes in your business or agreements and how they may affect you.
Your contract compliance should abide by any new rules or regulations that may accompany changes in your organization’s environment. Your industry standards may need to be adjusted as your business experiences growth or as you introduce new products to your list.
Contract regulations and obligations could be finetuned in a bid to adjust to the inevitable changes in the business world. Take the Covid-19 Outbreak period, for example; before now, businesses had had their staff always coming to work at the office. But with the advent of Covid, everything changed. Your team could now work remotely and still be as efficient. In fact, according to this research, up to 47% of employees in Australia, the United Kingdom, and France worked remotely during the lockdowns in 2020
Work timings too were adjusted, board meetings turned virtual, businesses laid off much staff after realizing that technology could perform the same task even more effectively, and so on.
Any business that failed to adapt to the situation at that time either crumbled or experienced huge losses. It is also crucial that you always keep tabs on industry standards and adjust your contract strategies to ensure you’re abiding by them.
Conclusion
Contract compliance should be a continuous thought throughout each stage of your contract and business management process.
Set goals and measure those goals with your set metrics; automate your contract management by using one of the various contract management systems that work for you.
Be clear on the roles everyone is to play, make regular audits to ensure everyone is keeping to the agreements, and be up-to-speed with any changes in business standards or the business world at large. Your contracts should also abide by the law to avoid legal trouble. You can get a contract compliance officer to help you do this if need be.
In business, agreeing is one thing; keeping to that agreement is where the actual work lies. The integrity of your business depends on it.