Your company’s contracts govern every aspect of how you do business, from employee conduct to how your IP is protected to, of course, the deals you negotiate with suppliers, clients, and vendors.
Managing those contracts can quickly become a nightmare. Drafting, negotiating, executing, and administering a contract takes a lot of expertise and time. If there’s a way to make the process more efficient, it’s bound to cut costs.
You need to automate contract lifecycle management (CLM) with a software-based solution. Your contracts will be better, your third-party relationships will improve, and, of course, you’ll save money. Luckily, there is a lot of contract management software to choose from.
Save Money with Automated Contract Management
Updating your contract management technology can save you a lot of money in reduced human error, loss prevention, contract renewals, and more. For example, if using a newer contract management system makes your processes 20 percent faster, that’s how much you’ll save on outsourced costs, like legal operations. That’s also how much time staff members will get back to spend on (hopefully) more complex and creative tasks that can’t be handled by software.
Poor contract management alone can cost companies as much as nine percent of their annual revenue, an amount that can be recouped by renovating your contract management tools and procedures. A streamlined, automated contract management process can:
- Provide alerts and notifications that help you avoid paying penalties and capture penalties you’re owed;
- Notify you of impending deadlines, milestones, and expiry dates;
- Open up more opportunities for bulk-purchasing discounts;
- Facilitate greater savings in contract renewals; and
- Shorten your sales cycle to increase sales savings.
Of course, while cost savings might be the focus on improving your CLM procedures, it’s not the only benefit. A stronger contract management process will make things easier all around, simplifying negotiations, speeding up approvals, and making the most of your hard-fought contract terms throughout the administration of the contract.
Improve Your Own Company’s CLM Processes
The best way to improve your own company’s CLM processes is by implementing a software solution that provides the tools you need to draft, negotiate, execute, administer, and close out or renew contracts.
Don’t just buy the first software tool you find. Ideally, you want to keep things as simple as possible — too many templates and features can be overwhelming. Look for a simple, user-friendly software interface. Think hard about what features you need — gather key members of your team and brainstorm your ideal workflow process. Visualize your ideal workflow process in a flowchart. What features do you need from a software solution to make those steps happen?
Some basic features you might need include a document repository to store active and closed-out contracts, templates, and drafts. You might need a clause library or specific types of contract templates — think about the contract language you use the most and the types of contracts you most often execute. You’ll need the ability to use keywords to search contracts. You’ll want to be able to generate reports to track vendor performance, and you may want alerting and notification capabilities to remind you of important upcoming dates.
Compliance features are also important — maintaining regulatory compliance is a key feature of most companies’ contract management processes. You’ll need to be able to document version control, audits, and compliance with statutory or regulatory requirements. Recent trends in contract management have placed more emphasis on compliance documentation and adherence, as they have also emphasized collaboration and automation.
Think hard about what you need from a contract management app — for example, you might require industry-specific contract templates or a greater degree of transparency into the contract lifecycle for all concerned. Implementing a new contract management process is a chance to start afresh, and resolve the problems of your old, manual procedures. Make sure to give every member of your team a chance to give input into the overhaul and what they need from your contract management process.
If you haven’t automated contract management, you have a great opportunity for huge cost savings. Poor contract management could take a big bite out of your revenues, so it’s a problem well worth addressing. The sooner you start, the sooner you’ll see increased profits.