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Have you ever signed a contract, filed it and then completely forgotten it until something went wrong?
Perhaps a renewal date has passed, and now you're stuck on another year of overpriced services. Or worse, a customer claims you didn't deliver something, but no one can find the original contract to prove otherwise.
These small contract moments only seem urgent when they cost you time, money, or peace of mind.
That's where a smart approach to managing contracts comes in. It is not just about organizing them, but also about keeping track of what they contain: deadlines, risks, obligations and opportunities.
If your company is still working with spreadsheets, email chains, or dusty folders on SharePoint, it might be time to rethink your contract process.
We want to find out how companies move forward not by working more, but by taking control of their contracts from the start.
Basics of contract controlling
Contract controlling is the ongoing monitoring and administration of contracts after they have been signed as part of a more comprehensive contract management strategy. It focuses on collecting and analyzing contract data so that management can effectively plan and manage the business. In practice, contract controlling offers a structured way to answer questions such as “Will we deliver all contracts on time? Are we meeting our contractual obligations? Which contracts involve the greatest risk or the highest costs?”
Specifically, contract controlling aims to:
- Ensure transparency and compliance: Keep track of contract terms, milestones, and deliverables so that nothing falls through the cracks.
Managing risks: Identify contract risks early on (ambiguous clauses, heavy contract penalties, financial risks) and take corrective action before problems arise. - Improve performance: Measure contract performance using KPIs and optimize results.
- Optimize costs: Find ways to consolidate spending, negotiate better terms, or avoid waste.
- Inform strategy: Provide data for strategic decisions, such as whether to extend or renegotiate a contract, or which suppliers and customers increase value.
Contract types and their significance for controlling
Companies have many types of contracts to do, each of which has its own conditions and risks. Common examples include supplier contracts, service agreements, leasing contracts, maintenance contracts, and license or distribution agreements. Each type of contract requires special attention when it comes to contract control. For example:
- Supplier contracts: Focus on pricing conditions, delivery dates and quality. Controlling focuses on fulfillment, payment terms and contractual penalties.
- Service agreements: Contain Service level goals (operating time, response times). Controlling ensures that key performance indicators are met and applies credits or penalties as required.
- Lease agreements: They may include renewal options or variable pricing. Controlling monitors deadlines and compliance with the conditions.
- Maintenance agreements: Include service obligations. Controlling ensures that tasks are carried out on time and within budget.
It is crucial that contract controlling is adapted to the type of contract in question. Regardless of the type, all contracts should be centrally documented with key data fields for effective monitoring and analysis.
Why contract controlling is important
- Minimize risks
Contracts often involve risks — missed deadlines, unclear responsibilities, or unfavorable conditions. Without supervision, these can lead to disputes, contractual penalties or interruptions in performance.
Contract controlling creates structure by tracking the most important obligations and identifying risky clauses in good time. This allows legal and procurement teams to act proactively rather than reactively.
- Save costs and resources
Many companies waste money through overlapping services, forgotten contract extensions, or poorly negotiated terms. Contract controlling gives you an overview of your obligations — and options for reducing costs.
It allows you to consolidate providers, renegotiate terms, and stop paying for things you don't need. Automated alerts and approval workflows reduce manual effort and speed up decision-making.
- Save costs and resources
Compliance isn't just about ticking boxes, it's about staying protected. Whether it's legal regulations or internal standards, contracts involve obligations that must be met.
Contract controlling ensures that no important clauses are overlooked and ensures that decisions are comprehensible. This strengthens your legal position and ensures that your company meets both legal and contractual expectations.
Contract Controlling Process and Phases
Contract controlling is a continuous process that starts before a contract is signed and extends over its entire life cycle. Here are the key stages:
Tools and technologies for effective contract controlling
Contract Management Software: Your Contract Control Center
Contract Management Software has become almost indispensable today. These platforms combine all of your contracts in one place and automate many of the tedious tasks associated with contract management. Typical features include:
- Centralized document storage (no more searching for files)
- Automated approval workflows and e-signatures
- Deadline reminders to avoid costly automatic renewals or missed cancellations
- Clause libraries for fast, consistent contract drafting
- Dashboards to monitor contract performance and risks
Popular tools you may have heard of include top.legal, Icertis, SAP Ariba, Agiloft and DocuSign CLM - all are designed to streamline the creation, storage, and tracking of contracts.
One of the biggest benefits? These tools reduce costly errors caused by siloed information or manual processes. Experts estimate that poor contract management can cost companies up to 2 trillion dollars a year. That is a high price to avoid.
Of course, the introduction of contract management software is not without problems. It can take time and resources to set everything up and train your teams. And no software can replace solid processes and high-quality data entry. But when used correctly, these platforms create transparency, minimize errors, and help you keep your contracts — and your business — on track.
Artificial intelligence: The future of contract controlling
AI takes contract controlling to the next level. While contract management software organizes and automates, AI digs deep into the details and recognizes risks and trends faster than anyone could. AI-powered tools For example, they can scan hundreds of contracts in seconds to find tricky clauses such as vague provisions, uncovered liabilities, or compliance gaps that could lead to problems later on. That means your legal and procurement teams spend less time manually reviewing and more time making strategic decisions.
In the future, AI should help summarize contracts, highlight important points, automatically mark important data such as renewal dates, and even predict which contracts should be renegotiated. Imagine asking your system, “Show me all contracts with cybersecurity clauses” or “Which contracts have liabilities above $X?” and get instant answers in easy English.
By 2025, AI-powered contract information will likely be integrated directly into the apps that your teams use every day, such as your ERP or CRM. So become salespeople For example, receive pop-up warnings about expiring contracts directly in your workflow without having to change the system.
Important tips for effective contract controlling: What to do and what to avoid
Here are some practical tips to help you stay on top of things and avoid common mistakes.
Centralization of contract filing
doing: Store all contracts in a secure, accessible location — whether it's SharePoint, Google Drive, or a dedicated Contract software. Centralization not only prevents files from being lost, but also ensures that teams in different departments can quickly find and reference contract details when needed, improving collaboration and response times.
avoiding: Distributing contracts across multiple personal drives, spreadsheets, or email inboxes, resulting in version confusion, missing updates, and wasted time searching for documents.
Using standard templates and clause libraries
Do: Develop and use standardized contract templates and approved Clause librariesto maintain consistency, reduce errors, and speed up preparation. This approach ensures that all contracts comply with company policies and legal requirements and relieves the legal department of repetitive tasks.
Avoid: Any team or individual can draft contracts from scratch without guidance, increasing the risk of errors, gaps in compliance with regulations, and delays in negotiations.
Set automatic alerts for critical data
Do: Implement automatic reminders for important contract milestones such as contract extensions, termination periods, price increases, and checkpoints for service level agreements. Automated notifications reduce the risk of costly missed deadlines and ensure that everyone involved takes timely action without relying on manual follow-up.
Avoid that: Depending on the reminder, manual calendar entries, or scattered email reminders, which often result in missed deadlines and financial penalties.
Define and track clear KPIs
Do: Set measurable key performance indicators (KPIs), such as compliance with delivery dates, billing accuracy, number of disputes, and average contract completion time. The regular review of these key figures helps to identify bottlenecks, risks or areas in need of improvement and makes contract management a proactive business function.
Avoid: Working without defined metrics or neglecting data verification prevents early identification of problems and limits your ability to optimize contract results.
Cross-departmental collaboration with defined roles
Do: Involve all relevant teams — legal, procurement, finance, operations — and clarify who is responsible for drafting, reviewing, approving, and managing contracts. Cross-departmental collaboration promotes transparency, reduces silos and improves the reconciliation of contract obligations and risks.
Avoid: Allowing departments to act in isolation or passively assume a common understanding, which often leads to miscommunication, duplication of efforts or missed commitments.
Regular review of contracts
Do: Schedule regular contract reviews or performance reviews — quarterly, semi-annually, or when the contract is renewed — to compare actual spending, deliveries, and compliance with contract terms. A regular review enables you to identify cost overruns, renegotiate unfavorable clauses, or identify opportunities for improvement.
Avoid: Seeing signing a contract as a last step and forgetting agreements, which means that your company could be exposed to risks or miss out on added value.
Use data-driven negotiations and e-signatures
Do: Use the insights gained from contract data to negotiate better terms, such as performance bonuses, waivers of contract penalties, or volume discounts. Put the Electronic signature technology one to speed up signing, improve transparency about who signed, and reduce administrative delays.
Avoid: Negotiate without data support or relying on paper-based or manual signing processes that slow down the deal and increase the risk of errors.
Manage changes and train users
Do: When introducing new contract management tools or processes, involve users early on, provide thorough training, and communicate the benefits clearly and clearly. This approach promotes acceptance, minimizes resistance, and helps embed best practices into daily work processes.
Avoid: Introducing new systems without support or ignoring user feedback, often leading to frustration, low usage, and a return to inefficient old habits.
