Effective Contract Management has become the need of the hour. The field of contract management is brimming with challenges that prevent organizations from achieving operational efficiency and generating more savings. Effective Statistics¹ indicate that enterprises lose between 5 to 40% of a deal’s value to inefficient contract processes. Several challenges of the contract management process include lack of supplier performance information, missing contingency or risk mitigation plans, and the shortage of notifications on obligations, rights, and terms.
One way to overcome the challenges that we discussed above is to use a dynamic contract management tool. The main purpose of contract management solutions is to eliminate unplanned renewals of unwanted services and provide spend visibility, which is critical in ensuring they are getting the best value for their investments.
This article will take an in-depth look at how organizations can use a contract management platform to optimize their financial resources and generate more savings.
Having all contract information digitized in a centralized location is a best practice in today’s data-driven economy. A contract management tool provides organizations with complete visibility over their contracts, making it easier to evaluate them by specific terms, deliverables, milestones, and key dates. In turn, you can renegotiate those contracts and consolidate the number of vendors in your portfolio to identify opportunities for cost savings.
The benefits of contract management solutions do not end there as it also helps your teams manage risks. Organizations can set triggers that alert their contracts team to obligations that incur fees, changes in contract values, and vital renegotiation points. It enhances the control of control language, thereby reducing the costs resulting from errors like legal fees and litigation.
Missing contract renewals is a common trend for growing businesses. As the organization experiences rapid growth, many leaders often shift their focus away from a specific contract area. This can lead to a lack of clear accountability for contract management across the business and losing key suppliers without you realizing.
A contract management platform enables you to understand the state of the current contract, its value to the business, and the shared history of issues and disputes. This puts you in the best position to get what you want from the contract renewal. When renewable contracts are negotiated with more insight and thought, your organization can gain higher savings from the same set of customers.
Another business case for contract management system is its ability to close deals faster and reduce the sales cycle. Contracts take time to get approved, resulting in buyers moving on to other priorities and the deal falling off. Contract management systems reduce your contract approval time by simplifying contract creation and standardizing organizational collaboration and approvals.
This ensures that all representatives follow a structured process to prevent organizations from losing money due to inaccurate contracts. It also reduces the back-and-forth of emails and the hunting down of individuals required to approve the contract. When checking options for a contract lifecycle management software, ensure the solution is geared with e-Signature capabilities, automated workflows, and latest templates to speed up the sales process and reduce the time it takes to create, share, edit, and sign contracts.
Most business relationships going awry can be associated with misinterpretations, misunderstandings, and a failure to describe the contract scope accurately. A contract management tool boasts dynamic dashboards that let you visualize and spot contracts that pose a risk or compliance concerns. These dashboards display contract information according to areas relevant from contract term dates and vendor clauses to upcoming obligations.
Determining compliance issues allows you to take corrective actions that prevent organizations from suffering massive amounts levied on non-compliance. Data visualizations also reduce the cognitive load of cognitive professionals. Therefore, ensuring organizations can engage their workforce in reading contracts and achieving better results at a fraction of the time, costs, and effort usually required.
Contract teams spend weeks or even months on finding the right contract or the most appropriate clause. Contract management tools slash this time in half by integrating structured and unstructured data into the system. This ensures your data and contract clauses are available precisely the moment you need it, thus, making it easier to find delayed deliveries and late payments that can incur financial penalties.
Why is contract management important? Keeping track of outdated contracts without the right system in place can be a challenge as it could result in revenue leakage. Having a Google-like search tool also enables you to get relevant insights on what percentage of your contracts have performance metrics, making it quicker to measure contract turnaround times.
Contracts are the foundation of organizations for many sectors, especially in the legal industry, where maintaining business relationships is vital. SpotDraft is an industry-standard contract lifecycle management solution that empowers organizations to create, manage, and analyze all their contracts in a centralized location. Check out the software if you are looking for such a tool.
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