So you've found the perfect vendor or customer for your SaaS business who fits the bill (both literally and figuratively). You negotiate prices, agree on the contract terms, and sign the paperwork.

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So far, so good.

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But what happens after this?

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How do you ensure the contract is executed seamlessly without delays or disruptions?

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Contracts are one of the leading causes of legal disputes, and poor management can lead to businesses losing 9% of their annual revenues. This inefficiency further translates to missed opportunities, delayed contract renewals, and non-compliance risks for SaaS businesses.

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This is where a strong contract administration plan comes in. It outlines all essential contract details both parties must know to avoid any disputes later. With a well-structured plan, you can streamline processes, automate repetitive tasks, and ensure all contracts are executed and managed seamlessly.

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What is a Contract Administration Plan?

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A contract administration plan is a framework that outlines how different contracts will be managed throughout their lifecycle to ensure all obligations and compliances are met without any hassle. It streamlines post-signature tasks, helping you:

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• Fulfill the agreed contract and legal terms
• Track renewals
• Mitigate compliance risks

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Creating a contract administration plan is particularly critical for SaaS businesses that deal with recurring subscriptions. It can help them minimize risks and inefficiencies and focus on scaling their business.

For example, suppose your team has finalized a contract for a new client's software integration. The contract deliverables include:

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• Setting up API access within two weeks
• Conducting a client training session
• Creating custom reports by the end of the first month

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However, your contract administrator suddenly falls sick. With a contract administration plan, your team can access all the essential information to carry out the tasks without hassle. In short, the plan acts as a safety net, preventing confusion even in the absence of key stakeholders.

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A project management plan typically includes 4 key details:

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• Deliverables
• Timelines
• Delivery channels
• Key stakeholders

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How to Create a Contract Administration Plan?

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A solid contract administration plan helps you maintain compliance, minimize risks, and boost efficiency. But where do you start?

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Here are some actionable steps to create a plan that can help you manage vendor agreements and client contracts seamlessly:

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Step 1: Outline the Goals and Scope of the Project

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The first step in creating a contract administration plan is to clearly outline the project's goals and scope. This ensures that both parties are aligned and agree on the same objectives.

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'Understanding contracts thoroughly is indeed crucial for effective contract administration. Being familiar with the scope, deliverables, milestones, payment terms, and performance standards enables proactive management and monitoring of contractual obligations,' explains Contract Manager Ahmed Elshourbagy.

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Here's how you can define the project scope of a contract:

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• Set SMART goals (specific, measurable, achievable, relevant, and time-bound).
• Highlight key deliverables and specify what needs to be achieved and when.
• Include contract limits to prevent scope creep.
• Collaborate with the entire contract management team to make sure everyone is on the same page.

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Step 2: Define roles and responsibilities

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When roles are unclear, it can lead to confusion, communication barriers, and delays in deliverables. Therefore, you must clearly define all key stakeholders and assign responsibilities to ensure an efficient and seamless process.

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You can easily do this using the RACI matrix:

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• Responsible: The person directly working on the contract.
• Accountable: The person answerable for the contract.
• Consulted: The experts providing input.
• Informed: The people who need updates on progress.

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Step 3: Identify Performance Metrics

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Performance metrics help you track how well a contract is being executed. By identifying the right performance metrics for a contract, you can ensure all parties meet their obligations and projects remain on schedule.

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Dattaram Karivadekar, an Administration and Facilities expert, suggests 5 tips to define contract management KPIs:

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• Define key performance indicators (KPIs) to track progress, quality, cost, and time.
• Establish performance standards for minimum acceptable service or output levels.
• Align measures and standards with contract objectives and scope.
• Ensure clarity and understanding of KPIs and standards among all parties.
• Regularly monitor and evaluate contractor performance against set measures and standards.

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Step 4: Set Down Monitoring and Reporting Procedures

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Establishing clear monitoring and reporting procedures in the contract administration plan is essential to ensuring smooth contract execution. This will enable all stakeholders to track contract performance in real-time and ensure the project remains on track. This is also essential to run evaluations of contractor performance.

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Without clear monitoring and reporting procedures, you risk:

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• Missed deadlines
• Subpar deliverables
• Non-compliance
• Strained vendor or client relationships

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For example, suppose your team has signed a contract with a third-party vendor for software integration. In this situation, your monitoring and reporting procedures could include:

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• Specifying deadlines for each phase of the integration
• Regular reports to track expenditures against the agreed budget
• Terms for service delivery and quality standards

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Step 5: Define Communication Channels

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The next step in creating a contract administration plan is clearly defining the communication channels. While selecting a communication channel, make sure it is:

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• Secure
• Efficient
• Easily accessible to all stakeholders

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Clearly defined communication channels help the team stay aligned and resolve all issues promptly. Otherwise, you risk miscommunications, information delays, and unnecessary confusion, impacting the project.

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'In my experience, setting clear expectations from the start and having regular check-ins helps keep vendor communication on track. Also, using a shared platform for updates can be a game changer for responsiveness,' explains Grayr Adzhemyan, CEO at Samolet Plus Global.

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Step 6: Implement a CLM System

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A contract lifecycle management (CLM) system is a powerful tool to streamline end-to-end contract management process. Integrating it into your contract administration ensures every contract is well-organized, transparent, and efficient. Moreover, since it automates the process, it reduces the risk of human error and gives real-time access to all contract data.

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But before you select a contract lifecycle management software, evaluate your needs and opt for a tool that best suits your business size, complexity, and contract volume.

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Best Practices for Creating a Contract Administration Plan

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Creating an effective contract administration plan is pretty straightforward. However, certain industry best practices must be followed to ensure contracts are managed effectively and enhance collaboration between internal teams, clients, and partners.

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1. Create a Centralized Database

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To ensure your contract administration plan is effective and efficient, it's best to create a centralized database for storing all contract-related documents. This will ensure stakeholders can easily access all relevant contract records, preventing miscommunications and delays.

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Plus, a centralized document repository also reduces the risk of losing important documents, ensuring better security and smooth operations.

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2. Clarify all Details with Both Parties

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Before finalizing the agreement, make sure to clarify all details with both parties involved. Even a minor misunderstanding can lead to costly mistakes, delays, and even legal disputes.

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Moreover, for SaaS businesses, where services are often delivered digitally, it is essential to ensure both parties understand terms for renewal, payment schedules, service levels, and data privacy to maintain healthy, long-term relationships.

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3. Understand Contract Risks

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Let's face it: no matter how solid a plan you create, there will always be the risk of things falling through the cracks. Be it financial, operational, legal, or compliance, it's essential to understand the potential risks that could arise during the contract tenure and be prepared for it.

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This can also help you and your team identify early signs of potential complications and take corrective action to address them.

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4. Automate Manual Administration Tasks

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If you're dealing with multiple contracts, manual processes can be a big hassle. They are time-consuming, error-prone, and resource-draining. Using contract management software to automate these tasks can help you:

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• Boost efficiency
• Optimize resource allocation
• Enhance accuracy
• Enable your team to focus on other core tasks

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Don't just take our word for it. Research suggests a whopping 90% of businesses say automating processes has helped them reduce manual errors, complete tasks quickly, and produce high-quality work.

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5. Standardize all Contracts

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One of the most effective ways to streamline your contract administration process and reduce legal risks is standardizing your contracts. By using standardized contract templates, you can ensure consistency across all agreements, reduce the chance of overlooking key clauses, and accelerate the contracting process.

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Plus, it also helps maintain compliance with industry regulations and company policies, ensuring every contract automatically adheres to required legal standards.

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Here are some elements that you can standardize:

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• Key terms regarding the payment, intellectual property, confidentiality, etc.
• The approval process
• Compliance clauses for regional or industry regulations
• Format, style, and language

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To Sum Up

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A well-crafted contract administration plan helps you streamline operations, mitigate risks, and ensure smoother contract executions. However, to create an effective contract administration process, it is essential to follow certain best practices, such as standardizing contracts, clarifying details, automating manual tasks, and monitoring performance.

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Moreover, with the right tools and strategies, you can further reduce manual work, enhance collaboration, and ensure compliance with legal requirements.

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With advanced spend management platforms like Spendflo, you can further optimize your SaaS procurement process and enjoy benefits like:

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• Up to 30% guaranteed savings
• Expert contract negotiations to get the best deals
• Evaluate active contracts to optimize your company's SaaS stack
• More time to focus on core business responsibilities

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Ready to see Spendflo in action? Book a demo now and simplify your SaaS procurement process!

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FAQs

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1. What is the basic contract administration plan?

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A contract administration plan defines the end-to-end processes and responsibilities for the management and execution of contracts. It typically includes the scope of work, timelines, roles and responsibilities, risk management strategies, and performance metrics.

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2. How do you write a contract management plan?

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Follow these steps to write an effective contract management plan:

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• Define the objectives and key deliverables of the contract
• Identify key stakeholders and their responsibilities
• Establish timelines and milestones
• Identify communication channels and reporting structures
• Set measurable performance metrics

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3. What is an example of contract administration?

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An example of contract administration could be a SaaS company managing a software licensing agreement. The company's contract manager ensures all deliverables are met on time, manages renewals, and resolves any issues with the vendor or customer.

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4. How do you write a good management plan?

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To write a good management plan, you must:

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• Define clear objectives of the contract
• Assign roles based on team members' expertise
• Specify the resources and timelines for each task
• Ensure all stakeholders are in the loop for every update or concern
• Identify potential challenges and create contingency plans

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5. What are contract administration plan best practices?

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Some best practices for a contract administration plan include:

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• Centralizing contract data
• Clarifying all details with both parties
• Understanding risks
• Automating manual tasks
• Standardizing contracts

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