However, many SMEs struggle with managing these contracts and maintaining compliance. By understanding the key processes and seeking legal guidance, you can optimise your procurement contract management for high performance.
‘If you fail to prepare, you prepare to fail, as the old saying goes. Never has this been truer than in contract management and compliance. As an SME owner, you must stay on top of your contracts by managing them, being aware of deadlines, tracking relevant changes in legislation and taking the lead during renewal negotiations,’ says Jeremy Redfern, Partner in the corporate and commercial team with QualitySolicitors Parkinson Wright. ‘It can sometimes feel overwhelming for smaller businesses, but with some basic good housekeeping and by seeking the correct legal support, you can set yourself up for business stability and success.’
Jeremy highlights some of the key considerations when assessing how strong your own SME contract management and compliance is.
Contract management processes
To manage your procurement contracts effectively, start by establishing a clear contract management process. This should involve several steps, including the creation, execution, and monitoring of contracts. Begin with setting up procurement contracts that clearly outline the terms, responsibilities, and expectations of all parties involved. The contracts should always include essential clauses addressing payment terms, delivery schedules, and quality standards.
Our team of expert lawyers are perfectly positioned to assist you with all your contract drafting needs. A professionally drafted procurement contract is the first step on your contract management and compliance journey.
Once the contracts are in place, monitor their execution and delivery closely. Set up diary alerts for important dates like renewal deadlines or compliance checks. Regular communication with suppliers can help you identify any issues early on, allowing for proactive solutions. In particular, it is important that you:
- record key dates, including any that relate to contract commencement, break windows, renewal and termination;
- ensure that you stay on top of key contract aspects like KPIs, delivery schedules, and contract milestones;
- have a quality control system which can flag potential contractual issues before they become a problem
Contract renewal
Contract renewal is a critical aspect of procurement management. As a contract approaches its expiration or renewal date, it is essential to evaluate its performance and decide whether to renew, renegotiate, or terminate. Review the contract’s success in fulfilling your business needs and assess supplier performance.
You can consult with our commercial solicitors, who will be able to advise on such matters as contract renewal windows, service of notice requirements, the operation of auto-renewal clauses, and renewal or termination trigger deadlines.
If you choose to renew, consider negotiating better terms based on your experience and market conditions. This is an opportunity to strengthen your relationship with suppliers and secure more favourable agreements. Establishing a timeline for renewals can help you avoid last-minute decisions and potential disruptions in your supply chain.
Our firm are specialists at supporting contract renegotiations, and we can be your trusted advisor in either the foreground or the background so you can secure the best possible deal for your business.
Compliance checks
Compliance checks are integral to maintaining the integrity of your procurement contracts. Regularly reviewing your contracts ensures that all parties are adhering to the agreed terms and legal requirements. This includes monitoring adherence to regulations regarding employment laws, health and safety regulations, environmental standards, and industry-specific guidelines, together with very serious matters such as anti-bribery and corruption, and anti-modern slavery.
Establish a routine for compliance audits that align with your contract timeline. This not only safeguards your business from legal risks but also fosters a culture of accountability with your suppliers. Additionally, document all compliance checks and any corrective actions taken to create a transparent record that can be referenced in case of disputes.
Furthermore, it is critical to stay abreast of legal developments that may affect the lawfulness and enforceability of your contracts, and the best way to do that is to engage lawyers to conduct regular supplier contract health checks. Our team are experienced in carrying out such checks and advising on appropriate action where compliance gaps are uncovered. These checks also help ensure that your contracts remain acceptable to your insurers.
How we can help
Our legal experts can guide you through the contract drafting process, ensuring that all essential elements are included and that your interests are protected. They can assist at the renewal stage, advising on key deadlines and processes, together with assistance during all stages of the negotiations.
Furthermore, our lawyers can conduct contract compliance checks and advise on risk management strategies, ensuring your business remains compliant with all relevant laws and regulations.
For an informal conversation on any procurement contract or compliance matter, please contact Jeremy Redfern or a member of the corporate and commercial team on 01905 721600 or via email worcester@parkinsonwright.co.uk
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.