Regardless of the nature or size of the business, there's one thing that no business owner can ignore: contracts. From payments and renewals to deliverables and deadlines, contracts ensure that every agreement is clear, enforceable, and aligned with business goals.

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But what are the steps leading up to the contract? And how do you ensure everything runs smoothly once it is signed?

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That's where contract management and contract administration come in—and no, they're not the same thing.

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Put simply, contract administration involves everything leading up to the signing of the contract—negotiating terms, ensuring compliance, and aligning the agreement with business goals. On the other hand, contract management comes post-signature. It involves tracking deliverables, monitoring deadlines, and ensuring that both parties meet their obligations.

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In this comprehensive article, we'll delve into contract administration vs. contract management in detail so you can put an end to the confusion once and for all.

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Definition of Contract Management

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Contract management is a strategic process that oversees the contract life cycle after it has been signed. It helps maintain compliance with legal and business regulations, ensuring all parties fulfill their obligations as agreed. In fact, effective contract management can help businesses save 9% of their annual revenue.

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Contract management typically includes the following functions:

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• Executing and fulfilling contracts: It involves coordinating with relevant contract stakeholders to get the work started, define distinct roles, and create a roadmap for fulfilling the contract.
• Tracking and enforcing deadlines: Contract managers are responsible for monitoring deadlines for deliverables, payments, and obligations.
• Maintaining accountability: The role of a contract manager goes beyond tracking and includes addressing delays and legal disputes to ensure all contract deadlines are met.
• Managing contract modifications: Contract managers make adjustments to the contract based on updated guidelines, business needs, or unforeseen circumstances.
• Periodic reviews: This involves reviewing contract terms and performance to ensure they are compliant and as per the agreed standards.
• Addressing breach of contract: Contract managers must identify and address contract breaches due to non-compliance or other potential issues.

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'Being a great contract manager involves much more than just knowing how to read contractual clauses. You need to master negotiation skills, non-verbal communication, team building, and strategic thinking,' explains  Andrea D'Ettorre, certified contract and commercial manager.

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Definition of Contract Administration

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Contract administration involves the various activities carried out before and during the signing of a contract. Effective contract administration ensures the contract is:

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• Legally sound
• Aligned with business objectives
• Structured properly for the implementation stage

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The key activities of a contract administrator include:

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• Discussing contract requirements: Contract administrators consult with internal teams, legal advisors, and external parties to understand contract requirements and get their opinions.
• Drafting contracts: This involves working closely with the legal team to create a robust contract.
• Reviewing contracts: Contract administrators are also responsible for verifying every contract detail to avoid potential loopholes or conflicts.
• Negotiations: The administrator conducts professional and productive contract negotiations to find a common ground for both parties.
• Sharing contract with the relevant parties: Once the contract is reviewed and finalized, the administrator shares it with all relevant contract stakeholders for approval and signature.

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Differences Between Contract Management and Contract Administration

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Most marketers often use the terms contract management and contract administration interchangeably. And we don't blame them. The two concepts are, in fact, essential to ensure the contract is fulfilled as per the delivery schedule and agreed-upon terms.

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However, contract management and contract administration play very different yet critical roles in the contract lifecycle. Let's look at some key contract administration vs. contract management differences so you can manage your entire process efficiently without any hassle.

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1. Scope

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One of the most significant differences between contract management & contract administration is the scope of activities they perform.

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Contract administration deals with the initial stages of the contract lifecycle. This includes understanding requirements, drafting and reviewing the content, and finalizing the terms. The goal of contract administration is simple - ensuring the contract is clear, robust, and legally sound. It prevents any loopholes and sets the foundation for a vendor or customer relationship.

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Contract management, on the other hand, has a broader project scope. It deals with the entire life of the contract, from execution to termination or renewal. For example, suppose you're purchasing a new SaaS management solution from a vendor. The contract manager will monitor the progress, ensure all integration and training deadlines are met, and verify if the solution meets the specifications you agreed to.

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2. Strategy

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Contract management prioritizes the long-term success of the contract and, hence, requires a more strategic approach. This means a contract manager needs to plan ahead, anticipate potential contract risks, and continuously monitor the contract's performance. Their goal is simple - driving the contract towards success, ensuring both parties derive maximum benefit.

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On the other hand, contract administration has a more tactical approach. From reviewing contract deliverables and sending reminders to coordinating delivery dates, contract administrators ensure the contract agreement is enforced correctly and as per the agreed-upon terms.

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Let's understand this with an example. Suppose you're entering an agreement with a SaaS business. The contract administrator would focus on managing documentation. On the other hand, a contract manager might focus on monitoring the service's performance, ensuring contract compliance, and implementing contract amendments.

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3. Risk Management

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The next contract administration vs. contract management difference lies in their approach to risk management. Management of contracts typically involves active risk management throughout the entire lifecycle of a contract. As such, contract managers constantly assess processes to identify potential risks that can hinder the contract's success.

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These risks could include service downtime, data security breaches, or even market changes. Contract managers need to identify these risks early and take the necessary steps to prevent potential issues from escalating.

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In contrast, contract administration is more focused on contract compliance risks. Contract administrators ensure all contract deadlines are met, deliverables are received, and all parties fulfill their obligations. Simply put, instead of managing or mitigating risks, contract administration focuses on keeping everything on track.

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To Sum Up

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Contract management & contract administration are like two sides of the same coin—they're different but also related. While management of contracts focuses on the broader strategy, performance, and risk mitigation, contract administration ensures both parties stick to their commitments and the contract runs smoothly.

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However, to enhance your contract management and administration processes, it's important to leverage automation. With spend management tools like Spendflo, businesses can streamline their SaaS procurements and make the most of their contracts.

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Here's how Spendflo can help you with SaaS procurements:

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• A centralized platform to track and manage all SaaS contracts
• Expert negotiations for fair agreements and up to 30% guaranteed savings
• Evaluate existing contracts to make strategic decisions for future agreements
• Save hundreds of hours on initial negotiations and compliance requirements

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Ready to take your contract management to the next level? Book a demo with Spendflo today and see how we can help you optimize your contracts from start to finish.

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FAQs

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1. What is the difference between contract administration and contract management in the context of category management?

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In category management, the contract administration process deals with the earlier stages of the contracting cycle. For example, contract drafting and finalizing agreements with vendors. Contract administrators are also in charge of contract negotiation. It ensures that contracts are legally sound and align with overall business goals. On the other hand, the contract management team monitors performance, ensures compliance, and manages relationships with vendors.

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2. What is the difference between contract management and contract governance?

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Contract management focuses on ensuring all terms of the contract are met after it is signed. However, contract governance focuses on ensuring contracts align with legal, regulatory, and company standards.

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3. What is the difference between a contract specialist and a contract administrator?

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A contract specialist manages the technical aspects of contracts, such as negotiating terms, reviewing terms, and ensuring compliance with legal standards. Think of them as subject matter experts in as subject matter experts in contract law. On the other hand, a contract administrator deals with the operational aspects to ensure the contract is enforced seamlessly.

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