Contract Administration vs Contract Management

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You have probably heard your team talking about contract administration and contract management. The two terms are used interchangeably but they’re actually different processes. Getting a handle on the contract workflow at your organization is vital to managing your contract load and prevents mistakes like going into a contract negotiation late or unprepared. It also reduces the risk of contract breach.

What is Contract Administration?

Many small businesses start here, with contract administration. It is the process you use to initiate a new contract – define scope, sketch out the details, and articulate payment terms. It includes redlining and negotiation, and shepherds the process to closing, when all parties have signed.

I know what you’re thinking: Isn’t that all there is?

Your contracts are the bedrock of your business and they govern almost everything you do. If you approach your business with a contract administration focus only, your business will be reactive instead of proactive and it may have fulfillment gaps that can get you in trouble. That’s why contract experts recommend a contract management approach.

Contract Management is a Holistic Approach

You might think of contract administration as the launch phase of a contracting process that is nested inside contract management, which is your entire contract workflow. We call this the contract lifecycle management process, which is a set of best practices developed by contract experts.

The lifecycle is a set of activities ordered in a one-way flow. These are the steps:

1. Contract Request

One party makes an offer for a service or good and there is a request made to draw up a contract. Teams set to work on the basics – what the contract is for and who should be involved. A contract is drafted and sent to the other party for review.

2. Reviewing and Redlining

The non-drafting party reviews the contract and considers the terms carefully. This can involve multiple stakeholders including legal and fulfillment teams, and third parties. Offers and corrections can be really finicky – a small change to the details can have a huge impact on fulfillment or cost. Contracts being negotiated without a contract lifecycle management platform often get bogged down in details at this point.

3. Approval

Eventually, all the parties should come to an agreement on terms and approve the contract. Each e-signs the contract and it’s considered approved. This is where the traditional contract administration process ends.

4. Execution

In this step, the companies must move on to what is needed to fulfill the terms of the contract. For the company selling the goods or services, they must start planning to produce. For the purchasing company, they must get organized to support the production in the ways they agreed to and make sure they’re ready to make payment when required. The most important thing is to keep track of what you promised in your contract so you’re fulfilling it to the letter. A contract lifecycle management tool will help you do this.

5. Storage

At the same time your fulfillment teams set to work, your contract management team should be making sure the contract is stored in a searchable contract repository. This is vital for making sure you can retrieve the correct, approved contract instantly when you need it.

6. Audit and Reporting

Once you have all your contracts in one, searchable database, auditing and reporting will be much easier. Your team will be able to prep for audits in a snap and having a 34,000-foot view of all your contracts will show you where savings can be made in time and money. Three-fourths of leading companies have their contracts in a searchable repository[PDF].

7. Renewal and Disposition

How often do you forget to cancel a free trial before the payment cycle kicks in? We’ve all done it. In fact, subscription services rely on it. I’m sharing to show how easy it is to forget about renewals – even ones that are worth thousands of dollars to your company. Often, small businesses think about renewals after a contract has ended or just weeks before it does, finding themselves scrambling for renewal with no time, power, or bargaining chips. Having a good contract management process means getting a heads-up early about contract renewal opportunities. That means you can go into renewal negotiations with a plan and a set of compelling offers.

How to Embrace Contract Management

It’s clear from the contract management lifecycle that there is more to the contracting process than just getting to a signature. So how do you bring good contract management practices to your business?

The first step is to know the stages and to understand that there is a good reason they are done in a one-way loop. Doing these steps out of order can lead to mistakes, misunderstandings, and a higher risk of breach. A contract lifecycle management tool like Anapact will help you keep on track.


  • Provides a single source of truth for the current state of your contracts through the redlining process.
  • Locks them down by role-based controls so only authorized people can edit certain parts (ie: only your legal team can edit clauses).
  • Offers a searchable inventory of all your contracts in one place.
  • Integrates an e-signature tool for easy approval.
  • Paves the way for reminders and automations that smooth your workflows.

Our platform is built on the best practices of contract experts and with small businesses in mind. Get a demo today.

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- About the Author

Picture of Louis Balla
Louis Balla
Louis is the Co-Founder of Anapact and partner at Nuage, a top rated ERP consulting firm based in Venice Beach, California.