7.1. Introduction to Contract Management

7.1.1. What is a Contract?

A Contract is a written agreement that binds two or more parties in a transaction. In the context of Contract Management, such documents are created to govern leasing activities, Warranty, Support and Maintenance.

A Contract is created with a third party Vendor (a Contract can be associated with one Vendor only), and it contains important information related to price, validity period of the Contract, Contract Type, and Sub-Contract Status.

7.1.2. What is Contract Management?

Contract Management is the practice of managing the life-cycle of contracts. Contract creation, execution and analysis come under Contract Management. It exists to maximize operational and financial performance of an organization, while minimizing financial risks.

Contract Management has proven to be a cumbersome and time consuming activity, which is why there’s a need for effective and automated contract management system.

Fundamentals of Contract Management

A contract governs the commercial relationship between two organizations through terms and conditions. Contracts have a large impact on the revenue and expenses of an organization. When a contract is made poorly, one organization might lose thousands of dollars for not being able to identify a simple technicality. Effective Contract Management creates powerful business relationships and paves the road to greater profitability, but only when managed correctly.

The Contract module of Motadata automates the Contract Management process with respect to:

• Automatic status change which shows the life-cycle of a Contract.

• System notifications that broadcasts the present status of a Contract.

• Auto renewal and expiry of Contracts.