In this article, we will explain exactly what ongoing contract abstraction is, why it’s important and share our 10 step process to implement contract abstraction. Read on to learn more.
As some of you may have read in our article on Contract Abstraction, it is the process of taking the important details from a contract and summarizing them. This makes it easier to quickly find and understand key information without reading the whole contract. It's like making a cheat sheet for the contract.
Contract abstraction needs to be ongoing because contracts often change with new details and updates. Regularly updating the summaries ensures you always have the latest important information at your fingertips. This is important because it allows you to quickly understand key points without reading through the entire contract each time.
Example: RentalCo manages 200 rental agreements that frequently change with new terms and conditions. By regularly updating their contract summaries, RentalCo ensures they always know the latest rental rates and tenant obligations.
Implementing continuous contract abstraction provides several advantages by ensuring that all contract details are up-to-date and easily accessible. This helps improve efficiency, compliance, and decision-making.
1. Improved Efficiency: Regularly updating contract summaries saves time by allowing quick access to key information without needing to read the entire contract.
2. Enhanced Compliance: Keeping contract details current helps ensure all parties meet their obligations and adhere to the latest terms and conditions.
3. Risk Mitigation: Up-to-date information helps identify potential issues early, reducing the risk of misunderstandings and legal disputes.
4. Better Decision-Making: Accurate and current contract summaries provide a clear overview, aiding in informed decision-making and strategic planning.
5. Cost Savings: By avoiding missed deadlines and non-compliance penalties, businesses can save significant amounts of money.
Here is our 6 step process for contract abstraction that you can implement in your business.
Gather all existing contracts and agreements in one centralized location. Organize them digitally for easier access and management.
Design a standard template to summarize key contract details, ensuring consistency across all abstractions.
Review each contract and fill in the template with the relevant information. Store these summaries in an accessible, central location.
Schedule regular intervals, such as monthly or quarterly, to review and update the contract summaries.
Designate a team member or a small team to handle contract abstraction and updates. Ensure they understand the importance of maintaining current information.
Consider using contract management software to automate and streamline the process. These tools can help track changes, set reminders for important dates, and store all summaries in one place.
We hope that you now have a better understanding of what ongoing abstraction for contracts is, why it’s important, and how you can implement our 6-step process in your business. If you enjoyed this article, you might also like our article on abstraction of equipment leases and guide for contract abstraction.