Contract controlling

Contracts create legally binding obligations. Contract controlling identifies potential risks early on and assesses them. Businesses can use the resulting measures for action to manage contractual matters in a risk-based manner. In the long term, this can help businesses make strategic decisions and develop contract processes that are efficient in terms of cost and performance. 

In this article, we discuss the role that contract controlling plays in businesses, and how you can manage risks across the board with contract controlling software. 

What is contract controlling? 

By definition, contract controlling includes all the measures for action that a business takes to manage its contractual risks. To do so, contract controlling measures and assesses processes and content based on the information collected. Contract controlling continuously monitors identified risks and related measures, thus ensuring reliable processes from beginning to end for contracts. 

Tasks in contract controlling 

The job of contract controlling is to minimize the risks that result from contracts – or in positive terms: to achieve the objectives of the contract. In the process, contract controlling creates contract-related reports. These reports provide a clear overview of risks and contain analyses of contractual performance, cost centers, processes, or compliance standards. 

In addition, contract controlling uses the reports to identify solutions and potential improvements related to existing risks. With the help of reports, managers can make data-based decisions that are financially sound and forward-looking for the entire business. 

Examples of contract controlling tasks include: 

Contract controlling vs contract management 

Contract controlling is a component of contract management. According to the definition, contract management includes all the steps that contracts go through – from creation to legally compliant contract archiving. On the other hand, contract controlling focuses on the risk associated with contract processes. 

Contract management thus provides the foundation for controlling. Structured and systematic contract processes are necessary so that risks are identifiable in the first step and can be minimized in the second step. 

Controlling, in turn, is responsible for how reliably the contract management processes run. Because every risk decision made by controlling influences operational contract management with the aim of making it more reliable and more profitable. 

Doxis supports contract controlling and digitally reproduces risk management processes for contracts in our contract management software. 

Dashboards provide transparency in contract management 

Doxis enables you to manage contracts transparently and clearly. Use self-configured dashboards to easily organize contracts, contractual liabilities, expiring contracts, and many other contract components. 

In addition to providing an overview, dashboards serve another purpose: Dashboards enable you to control contracts directly – by reviewing and editing contracts or assessing risks. 

Set deadline calendar reminders and notifications 

One risk with contracts is missing deadlines. Doxis solves this problem fully: the deadline calendar shows early on when contracts are set to expire, liabilities are coming due, or when income will be lost. When responsibilities are defined properly, Doxis notifies the relevant employees about upcoming deadlines. 

Categorizing risks of contracts 

Not every risk is given the same weight. In Doxis you can categorize risks according to severity. The legal department assesses initial risks once the contract is drawn up. It checks whether the contract is correct, consistent, and complete. This initial assessment by Doxis makes work easier for the legal team. 

When businesses reproduce the entire workflow in Doxis, Doxis forwards the assessed risks directly to the legal team. The team then assesses the risks based on predefined KPIs. After the legal team has assessed the risks, the contract partner is sent the digital contract for signature. All contractual risks are highlighted at this point. 

Success factors for effective contract controlling 

In summary, contract controlling is effective if it does the following: 

To achieve this, workflows in contract controlling and beyond must be transparent. Contract controlling software ensures this and makes processes more secure. When responsibilities are defined clearly, the software launches workflows automatically. 

For example, at the start of a contractual period, the software notifies the responsible employee. Risk assessment is particularly effective when contracts and their processes play a role in a wider business strategy. Contract controlling can result in end-to-end measures for action. 

Summary: Trust is good, control is better 

Every business relationship is based on a contract. In this regard, contract controlling checks whether this transaction is risky and investigates the risks entailed by a contract and its associated processes. Based on the risks assessed, contract controlling aims to develop action measures that contribute to the business’s success. 

KPIs and audits support a systematic approach. However, contract controlling is only really effective in a controlled environment, and this requires a digital solution. Automated functions accelerate contract controlling tasks and ensure accurate risk assessments. Doxis provides you with a comprehensive view of all the contract management processes. Integrate Doxis in existing processes and manage entire business processes using a risk-based approach.