WHAT IS CONTRACTUAL OBLIGATION?
A contract is an agreement between the two entities, creating an enforceable obligation to do and to refrain from doing particular things. The purpose of a contract is to establish the agreement that the parties have made and to fix their rights and duties with respect to a specific transaction for which such a contract is being executed. A Contract includes certain terms and conditions, critical dates, legal clauses, and obligations that the Parties to the Agreement shall comply with, or obligations that parties must commit to other third parties. Contractual obligations are those duties that either of the parties are legally responsible for in a contract. It is important for both parties adhere to their respective obligations under the contract.
HOW CAN OUR CONTRACT OBLIGATION TRACKER MAKE THINGS EASIER?
Contract Obligation Tracker is a process thathelps the parties to manage their obligations throughout the contract lifecycle. This process ensures that milestones, deliverables are being met and the value realizations are achieved as expected. The Contract Obligation Tracker is an extensive spreadsheet build to record and track contract deliverables and obligations. By the way of contract obligation tracker, one can extract from the contract of all of the deliverables and obligations so that they are located in one place, thus easy to see access and track. It also helps to find the reference and locate the deliverables and obligations to its position in the contract, see the detailed original contract text that makes up the deliverables and obligations, designate monitoring ownerships for each deliverable and obligations.
Therefore Contractual obligations are critically important and need to be managed as cautiously as negotiations or approvals. Poor tracking of contractual obligations will cost companies a considerable percentage of their revenue.
OBJECTIVE OF AN OBLIGATION TRACKER
The obligation tracking process helps in breaking down the contracts into a pre-built manner which helps in a better understanding of the contents of a contract. It eliminates the reading part and makes the contract simple and understandable. The purpose of the obligation tracker is to deliver and impart a clear understanding of the entire contract to its audience. Obligation tracking is primarily carried out to achieve certain objectives:
Risk Mitigation: To mitigate sourcing management, governance, and contract risks. It also helps to avoid the financial, legal, or reputational risk of the business and helps in achieving milestones and targets of the business.
End-to-End Visibility: Automating the Obligation Tracking Process improves end-to-end visibility while enabling businesses to speed approval cycles and reduce vendor performance risks. Greater visibility into contract processes significantly reduces the risk and exposure that complex agreements typically introduce.
Compliance with policies and regulatory guidelines: Contracts milestones and obligations can be managed more effectively with obligation tracking by identifying obligations specific to the laws under which the entity operates.
Easy to access: Out of a cluster of data, the segregation (of usually a Word-based contract into an Excel generated output) on basis of page, line numbers, clause numbers, tile, etc. can be done which is easy to access.
Enduring Relationship: Smooth functioning improve relationships between both the parties. It helps in accommodating and monitoring the changes transparently and collaboratively. It also helps in minimizing the surprises from both sides.
Effective Governance and Contract Performance Management: Ensures that the party complies with contract terms & conditions. It also ensures that performance expectations are achieved and helps to know whether Outsourcing objectives are fulfilled or not.
Distinguish Parties Rights & Obligation: It is the most important part of obligation tracking which helps to differentiate the rights and obligations of the parties.
Determining Financial liabilities: It helps in determining the liabilities. The need to maximize revenue and profits and minimize costs, fees, penalties, etc. make them an indispensable attribute to be tracked independently.
WHY IS CONTRACTBAZAR THE RIGHT CHOICE FOR YOU
Contracts are legal agreements that act as a framework for how your business runs. But are you able to memorize all your contractual obligations? While we all put effort into negotiating and drawing up contracts, they are all too often neglected after they’ve been signed. For your business to run efficiently, contractual obligations are required to be adhered to on time, instead of only being checked after something has gone wrong.
Obligation tracker is a systematic process of breaking down contracts with mathematical clarity. Managing all your contract obligations through ContractBazar will give your organization the ability to manage its obligations throughout the contract lifecycle. This process ensures that milestones, deliverables are being met and the value realizations are achieved as expected.