Key Challenges for Contract Managers in 2025 and How to Overcome Them

As contract management practices continue to evolve, professionals in this space are under increasing pressure to keep up with regulatory changes, operational risks, and the need for greater efficiency.

Throughout 2025, the challenges contract managers face will become even more pronounced, requiring a strategic shift towards automation, compliance management, and cross-functional collaboration.

Key contract Management Challenges 2025

This article explores the key challenges that will define contract management in the coming months and how contract management professionals can proactively address them.

1. Breaking Down Silos: Enhancing Contract Visibility and Collaboration

A persistent challenge in contract management is the lack of visibility across departments. Many organisations store contracts in disparate systems, making it difficult to access critical information when needed. This lack of transparency can lead to missed renewal deadlines, contract leakage, and compliance risks.

Research from the World Commerce & Contracting Association shows that poor contract management can erode company profitability by up to 9% annually.

Best practices for improving contract visibility:

• Centralise Contract Storage: Use a cloud-based vendor and contract lifecycle management (VCLM) platform to store and manage contracts in a repository, ensuring centralisation, accessibility, and security.
• Standardise Documentation Practices: Establish structured naming conventions, tagging, and categorisation to simplify contract tracking.
• Assign Clear Ownership: Define roles for contract oversight and configure role-based access to improve accountability.
• Implement Automated Alerts: Use automated notifications to track obligations, deadlines, and renewal dates.

2. Eliminating Bottlenecks: Automate Vendor and Contract Lifecycle Management

Manual contract processes slow operations, increase compliance risks, and add unnecessary costs. Contract managers often spend too much time on administrative tasks like tracking renewals, managing approvals, and ensuring policy compliance.

According to EY Legal, 89% of businesses say they're managing large volumes of simple contracts, contributing to repetitive admin and taking teams away from strategic work.

Actionable steps for successful use of automation with VCLM software:

• Streamline Vendor and Contract Onboarding: Implement automated workflows to ensure due diligence checks, document collection, and approval processes are completed efficiently before vendors are engaged.
• Enhance Contract Authoring and Execution: Use pre-approved templates and automated workflows to standardise contract creation, reduce negotiation time, and accelerate execution.
• Monitor Vendor and Contract Performance: Establish automated tracking for key contract milestones, vendor performance metrics, and compliance obligations to ensure ongoing oversight.
• Automate Renewal and Obligation Management: Use automated notifications and reporting to avoid missed renewals, ensuring all contractual commitments are actively managed.
• Integrate with Enterprise Systems: Ensure seamless data flow between the VCLM system and other business-critical platforms such as ERP, procurement, and risk management systems.

By embracing VCLM automation, contract managers can drive efficiency, improve compliance, and gain deeper visibility into vendor and contract risks, ultimately enhancing governance and commercial outcomes.

3. Adapting to AI: Transforming Vendor and Contract Management with Intelligence

The shift from traditional contract management to AI-driven solutions is accelerating. AI-powered tools can assist with contract risk assessment, negotiation support, compliance monitoring, and obligation tracking.

According to Gartner, by 2027, 50% of organisations will support contract negotiations through AI-enabled contract risk analysis and editing tools.

Steps for integrating AI into contract management:

• Deploy AI-Assisted Risk Analysis: Use AI tools to identify risks in contracts, flagging clauses that may pose compliance or financial challenges.
• Automate Contract Negotiations: Implement AI solutions that assist with redlining, suggesting edits, and tracking changes for greater efficiency.
• Enhance Compliance Monitoring: Use AI to detect deviations from regulatory requirements and ensure contract adherence.
• Use AI for Contract Summarisation: Automate contract review processes to extract key terms, obligations, and financial details quickly.
• Integrate AI with Existing Systems: Ensure AI-powered contract management solutions align with CLM, ERP, and procurement systems for streamlined workflows.

Using AI in contract management enables businesses to stay ahead of regulatory changes, reduce manual workload, and improve decision-making across vendor and contract lifecycles.

4. Bridging the Knowledge Gap: Building a Future-Ready Contract Team

As contract management becomes increasingly AI-driven, a growing gap exists between traditional skills and the digital expertise required to manage modern contract tools effectively. Without the necessary training, organisations may fail to fully leverage vendor and contract management technology.

According to a recent PWC report, 46% of employees believe AI and Generative AI will drive changes to the way their company creates, delivers, and captures value in the next three years.

Practical approaches to closing the skills gap:

• Develop Targeted Training Programmes: Provide education on contract automation, compliance workflows, and digital contract execution.
• Recruit Digital-First Talent: Seek professionals with experience in data analytics, digital contracting, and system integration.
• Encourage Continuous Learning: Support employees in obtaining industry certifications and participating in thought leadership events, particularly around GenAI.
• Foster Internal Knowledge Sharing: Create mentorship programmes to facilitate skill development among contract professionals.
  

5. Staying Ahead of the Curve: managing Regulatory Complexity

Contract managers in 2025 will need to contend with evolving regulations, including the Digital Operational Resilience Act (DORA), new AI governance laws, and expanded ESG reporting obligations.

With 57% of executives citing data quality as their top ESG challenge and 88% ranking it among their top three concerns, the need for accurate, verifiable data is critical when embedding ESG commitments into vendor and supplier contracts.Non-compliance due to poor contract data can lead to financial penalties, reputational damage, and costly remediation efforts.

Strategies to stay ahead of regulatory changes:

• Implement a Regulatory Monitoring Framework: Stay informed about regulatory developments through industry updates, legal advisors, and compliance resources. Regularly update contract templates and workflows based on new requirements.
  
• Enhance Contract Compliance Oversight: Conduct regular contract reviews to ensure agreements align with evolving regulatory standards.
• Foster Cross-Functional Collaboration: Work closely with legal, compliance, and business units to ensure new regulatory requirements are embedded into contracts from the outset.
• Deliver Ongoing Training: Equip contract managers with the knowledge and skills to navigate regulatory changes effectively through targeted training and internal knowledge-sharing initiatives.

Conclusion

Contract management in 2025 demands a proactive, technology-driven approach to overcome regulatory complexity, operational inefficiencies, and evolving business needs. Organisations must embrace automation, improve collaboration, and leverage AI-powered contract management to drive strategic value. 

By implementing a Vendor and Contract Lifecycle Management platform, businesses can better equip their contract managers to mitigate risks, optimise workflows, and future-proof their contract management practices.

To discover how Gatekeeper can help your organisation transform vendor and contract management, contact us today.