For businesses that have grown beyond a certain size, efficiently managing contracts is a full-time responsibility.
The signatories of a contract have a lot on their plate during the document’s lifecycle. Among other tasks, the organization needs to ensure that it meets all deadlines, provides all deliverables, and adheres to all requirements outlined in the contract.
In order to handle these duties, many businesses hire one or more contract administrators. But what is a contract administrator exactly, and how do they carry out their daily responsibilities?
This article will explore everything there is
to know about contract administrators: what they do, how they do it, who they work for, and the issues that they face on a day-to-day basis.
What is a Contract Administrator?
As the name suggests, a contract administrator is a professional who is responsible for creating and managing legal contracts in which the business participates. This includes making sure that all parties to the contract will fulfill their obligations as outlined in the document.
Contract administrators typically work at larger companies that may be involved with many different contracts, or highly complex contracts, at the same time. Such organizations are spread across a variety of industries, including construction, healthcare, education, insurance, finance, and government. Contract administrators often specialize in one of these fields, using their expert domain knowledge to the company’s benefit.
Why are Contract Administrators So Important?
Contracts are the foundation of the modern business world. Whenever a customer or another company agrees to do business with you, both parties agree to an explicit or implicit contract that defines the nature of the agreement and the relationship.
Depending on the terms and conditions, such a contract may be quite brief and based on good faith assumptions, or it may be thousands of pages long spelled out in highly technical language.
Contract administrators play a critical role in the success of a project. By ensuring that the terms of the contract are fully carried out, contract administrators lower the organization’s exposure to business and legal risk and make it more likely that the organization will turn a profit as a result of the deal.
The Day-to-Day Work of a Contract Administrator
The exact role of a contract administrator will depend on where they work and the types of contracts that they oversee. However, some typical responsibilities of a contract administrator include:
- Participating in contract negotiations before the document is signed
- Addressing any questions or conflicts regarding the contract
- Drafting boilerplate clauses for use in current and future contracts
- Monitoring the project’s budget, expenses, compliance status, and obligations
- Analyzing the potential risks posed by a contract
- Coordinating with the procurement and legal teams
- Reporting on the current status of contracts to managers and executives
Contract administrators need to interface with a wide range of teams and departments in the course of their work, including sales, finance, management, legal, and IT.
For example, contract administrators need to speak with the sales team to see which deals they have coming down the pipeline, and which contracts will be necessary for each one. This ensures that the sales process is running smoothly and won’t be tripped up by delays preparing the contract.
The Challenges of Contract Administration
As you may have gathered from the discussion above, contract administration can be a challenging job. Some of the main issues faced by contract administrators on a day-to-day basis are:
- Finding contracts: Contract documents may be widely scattered across the business on a mix of cloud drives, individual laptops and/or within business applications such as Salesforce. This makes it difficult for contract administrators to find them without a dedicated central repository.
- Ensuring contract compliance: Once a contract is executed, both parties must live up to their respective obligations. Without a dedicated contract management solution, however, monitoring and managing these obligations is a challenge. The organization must be able to share and proactively monitor terms from within the contract.
- Routing contracts for approval: Multiple parties within a company may need to agree to a contract before it can be signed, especially if the language has been changed during negotiations. Without an automated contract management system, getting approval from these parties in a short period of time may require a lot of "nudges" and follow-up emails.
- Knowing the status of a contract at a moment's notice: Contract administrators and managers often need to report the status of a contract up until the point it's signed: who has it now? When can we expect it to be signed? Has it been approved by finance? Why was it rejected by operations? This is especially difficult if the contract administrator is working on several big contracts at once.
Tools for Better Contract Management
The most valuable tool in a contract administrator’s toolbox is dedicated contract management software. Contract management software is an application that stores and manages an organization’s contracts, with the primary goal to streamline and automate much of the contract management process. A few popular features of contract management software are:
- A secure central repository for all contracts and related documents.
- Optical character recognition (OCR) that permits full text searching of data, documents and scanned items.
- Tools for easier sharing and collaboration.
- Automated alerts for deadlines, tasks, expirations, renewals, etc.
- E-signatures to speed up the closing process.
- Automated contract authoring.
- Self-service contract requests.
Contract administrators play a pivotal role in any larger organization, ensuring that all parties fulfill their contractual obligations. By choosing the right contract management software, contract administrators can reduce their business risk, increase compliance, and automate much of the contract management process.