Structured and proactive contract management is the key to effective cost management within a company. Without clear processes, contracts often continue to run in the background, which can lead to unnecessary expenditure and missed optimisation opportunities.
1- A centralised email address for contracts
All your contracts should be managed in a centralised system - this is the first step towards greater visibility and control. Similar to invoices, it is also a good idea to have a central email address for contracts where all documents are sent. This ensures that all contracts are collected in one place and not scattered in the mailboxes of individual employees.
2- Link contracts and invoices for faster approvals
Quotations, additional agreements and incoming invoices or payment advice notes should always be linked to the corresponding contract to ensure quick access to all relevant information.
As every contract leads to an invoice or payment, the finance team is often faced with the challenge of answering questions such as ‘Where is the signed contract?’, ‘Who concluded the contract?’ or ‘Does the invoiced amount correspond to the agreed conditions?’ without direct access to contract data. A centralised linking of contracts with the associated invoices ensures that contract information is immediately available when the invoice is approved. You can find out how to link documents in Candis here.
3- Define only one responsible person per contract
Contracts are often managed within departments or teams without a centralised overview of which contracts exist and who is responsible. As a result, no one often feels clearly responsible and contracts continue to run unchecked.
Only when contracts are visible can responsibility be transferred to the right people. For us, every contract should be assigned to exactly one person who is responsible for it. This means that it is always clear who the contact person is in the event of questions or changes. All other relevant people should be added as ‘to be informed’ - this way, they too are always kept up to date and receive reminders about important deadlines or changes.
4- Check contract terms and renegotiate if necessary
Use the automatic resubmission before the cancellation deadline to check the terms of the contract thoroughly and compare them with the company's current requirements. Not every contract needs the same amount of attention. We therefore recommend dividing your contracts into two categories.
Category 1: Contracts with flexible conditions
This category includes contracts whose terms and benefits can change over time, such as software, service, consultancy, maintenance and supplier contracts. Regular reviews ensure that the scope of services fits the current needs of your organisation and terms can be adjusted or renegotiated as required.
Start with the 10 contracts that cause the highest costs and check 4-6 weeks before the cancellation deadline whether renegotiation makes sense based on these questions.
Does the scope of functions still match the company's needs?
Are there new offers or packages with the current provider?
Can a discount be achieved by adjusting the term or payment conditions?
What alternative providers are there and would a change be attractive?
For all other contracts in this category, it is usually sufficient to check 2-3 weeks before the cancellation deadline whether they still meet the current requirements. If yes, renegotiate; if no, consider cancellation.
Category 2: Long-term contracts with fixed conditions
These contracts, such as rental, leasing or financing agreements, usually run without major changes. Here, it is often sufficient for the person responsible to receive a notification in good time before the end of the term in order to decide whether to extend or terminate the contract.
5- Manage and archive cancellations centrally
To ensure that contracts have actually been cancelled by the person responsible, both the notice of cancellation and the confirmation of cancellation should be archived centrally and linked to the contract. This provides transparency and ensures that the person responsible is liable for proper processing. Then set the contract to ‘inactive’ so that it can be seen at any time which contracts have been cancelled.