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What Are Contract Parameters? - Everything You Need to Know

Every contract you sign generates a huge amount of information that can be used to reduce risk and increase returns on future contracts. The difficulty is getting to this data and using it to improve your decision making.

Companies that neglect the value of contract parameters, do not correctly capture them, or do not address major gaps will never be able to exploit the full potential of their contract portfolio.

In this article, we'll discuss what contract parameters are, why they're important, and how they can help companies make informed decisions.

What Are Contract Parameters?

Contract parameters are the specific details and conditions that are set out in a contract and determine the rights and obligations of the parties involved. These parameters may include various elements such as the amount of work or services to be provided, payment terms, deadlines, guarantees, termination clauses, and other important details that define each party's expectations and responsibilities.

Before signing a contract, the parties involved usually negotiate to establish and ratify the contract parameters. Contract parameters can therefore be regarded as the fundamental basis of clauses to ensure compliance with mutually agreed conditions.

Examples of Contract Parameters

Since contracts serve as legally binding agreements between several parties, a high level of detail and specification is required. For this reason, there can be a wide range of different contract parameters. Here are a few common examples:

  • Contract type (NDA, MSA, SLA, etc.): The terms of the contract, the details of remuneration, the conditions for legal enforceability or the associated risks may all be referred to as contract types.
  • Information about customer and supplier contracts: A two-way agreement that legally requires an organization and a supplier to take on specific tasks. Each of the contracting parties is legally obliged to perform the tasks described in the contract.
  • Delivery dates: Are all fixed deadlines that the contractor must meet in order to fulfill his obligations under the contract.
  • Product or service specifications: Are “statements of need or requirements.” They contain an exact breakdown of the products or services that a provider has to deliver during the contract period.
  • Price or fee: Indicate the cost of the products or services to be received under the contract.
  • Contract expiry or extension: The time during the term of a contract at which it expires.

These are just a few examples of contract parameters; the list could go on and on. But note: All of this information is critical, particularly when it comes to renewals, disputes, and performance reports. That's why it's important, to note down all numbers, dates, names, addresses, and specific parameters in each contract.

Why Are Contract Parameters Important?

Contracts are often a treasure trove of information. They provide a schedule and serve as a record of what is happening within the company. Companies that analyze contract parameters can not only make better and more informed decisions, but also have the opportunity to identify inefficiencies in their contract process.

Here are three things you can improve if you start to analyze and understand the parameters of your contracts:

1. Faster decision making

  • When your contract parameters are properly managed and monitored, you are able to assess the performance of each individual contract and plan future contracts that will perform even better.

2. More efficient contract processes

  • You'll be able to identify the contracts that took a long time to negotiate and determine the reasons why if you better assess and understand your contract parameters. With all of these insights, your contract cycle times are accelerated and simplified.

3. Improved business relationships

  • The information in contract parameters is what you need to make your interactions with suppliers and other partners less stressful. By focusing on the parameters that your counterparty values most, you can communicate the most important priorities during the negotiation.

By analysing the results of previous contract negotiations, you can anticipate potential issues and suggest solutions that are likely to be acceptable to both sides.

How You Can Use Contract Parameters

More than ever, many companies are using contract information to drive their business forward by extracting, understanding, and analyzing contract parameters using contract management software. Here are the various reasons why a special Contract management solution will help you better understand your contract parameters. 

1. Access to contract information in real time

  • With contract management software, the most important contract parameters are not only centrally located but also easily accessible. You can a Realtime search performing and retrieve the information you need in a matter of seconds, instead of spending hours or days searching through physical documents in filing cabinets.

2. Improved workflow

  • In a typical business environment, it is difficult to find out the status of a particular contract. To determine who has what and when the next steps are taking place, you'll need to go through emails, messages, and conference calls. With contract management software, all information can be collected, analyzed and visually presented in a structured report or dashboard. This allows you to quickly determine where a contract is in the workflow process and which measures need to be taken next.

3. Reduces the number of missed appointments

  • The introduction of contract management software has many advantages, one of which is easy tracking of contract updates and progress. Extracting contract parameters is essential to inform all parties involved about the steps that must be taken to meet deadlines by recording important timelines for events, expiration dates, and renewal dates.

4. Determine the level of compliance

  • Regulatory compliance is essential for several industries. Depending on which industry you work in, your contract suppliers must comply with certain rules. For companies that manage a wide range of contracts, it can be quite difficult to find out important parameters from numerous contracts. By using contract management software, this work however significantly simplified.

Conclusion

The information contained in a contract has countless benefits. For companies, however, the manual evaluation of this data can take a lot of time. That's why companies should use all available tools to access this data without wasting time and money.

Our contract management software automates every step of the contract process and provides comprehensive monitoring, analysis and management of all important contract parameters. If you need help managing your contract parameters or want to make your contracts accessible, schedule a FREE demo today.

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