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What contract compliance looks like.

What is Contract Compliance?

Contract compliance is the process of ensuring that a company is living up to the terms of its contract. This can include making sure that the company is delivering on its promises, meeting deadlines, and not violating any terms of the agreement. Compliance officers are responsible for ensuring that contracts are being followed and often work with legal teams to ensure any potential issues are addressed. Contract compliance can be important for businesses large and small, as violations can lead to expensive lawsuits or other penalties. By taking steps to ensure compliance, businesses can protect themselves from these risks.

Safeguard your business with strong contract compliance

The goal of contract compliance is to guarantee that your company fulfills its contractual obligations. This means delivering on promises, hitting deadlines, and adhering to all agreement terms. Compliance officers, often working alongside legal teams, are responsible for overseeing adherence to contracts and addressing potential issues. Whether a large corporation or a small startup, ensuring compliance is crucial. Violations can result in costly lawsuits or penalties. By prioritizing compliance measures, businesses effectively shield themselves from such risks.

Companies can realize the maximum value of their contracts with compliance tracking and integration across enterprise systems. Identify and manage risk throughout the lifecycle with proactive insights on risk and compliance.

Cross-Agreement Relationships Management

Create rule-based relationships between contracts (e.g., MSA-SOWs) to better enable compliance-related activities, such as the enforcement of terms and roll-ups of SLAs and financials. Smart Links provide contextual access to related documents, helping users quickly understand the context around every project and agreement. This holistic view helps to:

  • Reveal complex dependencies between contracts to anticipate and address potential bottlenecks
  • Track potential liabilities by showing how the performance of one contract will impact other areas of the value chain
  • Link buy and sell contracts to better address back-to-back contracting challenges
  • Increase visibility across the value chain and drive alignment of terms

Commercial Contract Compliance

Achieve the full potential of negotiated contracts through better enforcement of commercial terms. The Icertis platform captures the terms of products and services, prices, discounts, rebates, and incentives in a structured form. Integrate that data with enterprise systems and help enforce terms for better contract performance.

For sourcing, automatically check purchase orders against agreed-upon contract language to detect incorrect billing issues. On the sell-side, automatically flow negotiated rebate and incentive information into financial systems for better visibility. Workflows ensure a review process to assess compliance before posting to financial systems for settlement.

Obligation and Commitment Management

Achieve better compliance for contract commitments by identifying, capturing, assigning, and tracking the completion of tasks assigned to business owners—even with commitments involving third-party paper and complex commitments. Contract workflows that require input and/or approval from users across regions or business units can instantaneously be executed.

Using seamless Microsoft integrations, you can create obligations from Word in addition to using the web interface. Leverage ICI’s intelligence to model even the most complex business rules, which automatically assign obligations to owners based on the characteristics of the commitment.

What are the benefits of contract compliance?

When companies engage in business, they do so with the understanding that there are certain risks involved. One way to mitigate these risks is to have a contract in place that outlines the expectations of both parties. A contract compliance review helps to ensure that both parties are adhering to the terms of the agreement.

There are several benefits to conducting a contract compliance review. First, it can help identify areas where the company may be at risk. Second, it can help ensure that both parties follow through on their commitments. Finally, it can help avoid potential disputes down the road.

Overall, a contract compliance review is an important tool for companies to use in order to protect themselves and their interests. By taking the time to review contracts on a regular basis, companies can avoid many potential problems and ensure that they are getting what they bargained for.

How can you ensure contract compliance?

When it comes to ensuring contract compliance, the process starts with understanding the contract lifecycle and knowing what to look for at each stage. By following a few simple steps, you can help ensure that your organization is in compliance with its contracts.

A Clear Understanding of the Contract Lifecycle

The first step is to develop a clear understanding of the contract lifecycle and what happens at each stage. This includes understanding the negotiation process, reviewing the contract terms, and monitoring performance.

Identify Potential Areas of Non-compliance

Once you have a clear understanding of contract lifecycle management, you can start to identify potential risks and areas of non-compliance. By doing this, you can develop processes and procedures for contract risk management.

Monitor Compliance on an Ongoing Basis

Finally, it is important to monitor the contract compliance process on an ongoing basis. This includes conducting audits and reviews, as well as maintaining communication with all parties involved in the contract.

The risks of non-compliance

As a contract manager, it is your job to ensure that your company complies with all contract agreements. However, there are risks associated with non-compliance. If your company does not meet its contractual obligations, you could be liable for damages. In some cases, non-compliance can even lead to the termination of the contract.

It is important to take measures to prevent non-compliance. Make sure that you understand the terms of the contract and that your company has the resources to meet its obligations. You should also have a system in place to track compliance and address any issues that arise.

By taking these steps, you can help reduce the risks associated with non-compliance. By understanding the contracts and ensuring that your company has the resources to meet its obligations, you can help protect your company from potential damages.

Why is contract compliance important for businesses?

As a business owner, you're likely to come across a variety of contracts. Whether you're hiring new employees, partnering with other businesses, or dealing with clients, contracts are an essential part of ensuring that everyone understands the terms of the agreement.

While some business owners may be tempted to simply sign whatever contract is put in front of them, it's important to take the time to understand the contract and ensure that it meets your needs. This is where contract compliance comes in.

Contract compliance is the process of making sure that all parties involved in a contract adhere to its terms. This includes reviewing the contract before signing it, as well as monitoring compliance throughout the duration of the agreement.

In sum, there are a number of reasons why contract compliance is so important for businesses. Most important of all, it helps to protect your interests. This is especially true for smaller businesses that may not have the kind of legal staffing and resources available to ensure compliance. When you're outsourcing a service or product, it's important to understand how your business will be protected by the contract. It's also important from a risk management perspective. Having a clear contract in place can give you the peace of mind that your needs are being met, and if something goes awry, you have grounds to initiate legal action against the provider. Having a well-drafted contract gives you the opportunity to manage your risk as a business.

To learn more about how a contract management system can help your organization track compliance and mitigate risks, please contact us to schedule a free demo. 

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Icertis Contract Intelligence

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Transforming contracts into structured, connected, and on-demand data is just the beginning. Discover the power of intelligent contract creation, automation, and insights to realize the full intent and maximize the value of every contract, clause, and obligation across the enterprise.

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