Tech

Why is Contract Lifecycle Management important?

Initially, the contract was engraved on clay tablets. For a long time, only the most critical contracts were registered. But the days of fewer and fewer contracts, handshake contracts, and IOUs are over. In today’s world, contracts are used to define almost every aspect of a company’s relationship with a third party. Sales contracts, service contracts, NDAs, SOWs, IT contracts, and even employment contracts allow companies to do business while protecting themselves from risk and lawsuits.

Since contacts control all business operations, a company’s process of creating, negotiating, and managing legal documents can significantly impact a company’s bottom line. Well-managed processes can increase revenue and reduce costs, but poorly managed methods can have profound financial implications. 

The challenge that many businesses face is that contract management takes a lot of time and resources. Managing small contracts can take dozens of employees, multiple departments, and hundreds of hours. However, well-informed companies may view contract management as a cost center rather than an opportunity. Recognizing the importance of contract management and improving internal processes, companies can increase revenue, reduce costs and reduce risk.

 What are the advantages of contract management? 

Here are some of the specific benefits that businesses can achieve by dramatically improving the contract management process:

Improve business operations 

To grow and maintain a competitive advantage, companies must balance agility and risk reduction. If a business cannot make quick decisions and adapt to market conditions, it is quickly left behind. The faster a business can scale contracts through its lifecycle, the faster it will grow. New customers, products, services, acquisitions, and partnerships rely on the company’s ability to manage contracts effectively and efficiently.

Cost reduction 

A lousy contract management process is not only time-consuming, but it is also costly. Unorganized processes can lead to unfavorable contracts, which can lead to poor project performance and lost costs. Additionally, insufficient tools and limited contract visibility can waste hundreds of hours researching contracts and reporting contract details. An invalid contract lifecycle can also have a broader economic impact. According to data from the International Association for Contracts and Business Management (IACCM), managing simple contracts costs an average of $ 6,900 for employees, while managing complex contracts can exceed $ 49,000. Fortunately, companies can significantly reduce these costs by speeding up internal teams to confirm, negotiate, and execute contracts. 

Risk mitigation 

Legally binding contracts help businesses minimize the inevitable risks when dealing with third parties. If you run into any legal issues or issues during your business relationship, you can use contracts to assign liability and compensation. In addition, it helps both parties to ensure compliance with the terms and commitments agreed upon during the negotiation phase. 

However, effective management of risky contracts requires careful contract development, negotiation, and confirmation. Without an organized process, essential terms can be overlooked. 

Increased visibility of suppliers

 Once a business reaches a specific size, it isn’t easy to know which provider offers which service. This is especially true for large companies with multiple segments, brands, or assets. It is not uncommon for these companies to go unnoticed and enter into numerous contracts for the same supplier and service. An excellent contracting process allows executives to understand the seller of a contract and the benefits and amounts associated with each contract. Increased visibility prevents companies with multiple subsidiaries from entering into individual contracts with the same supplier, increasing their ability to negotiate discounts and incentives. 

Best practices for security and compliance

 Companies in tightly regulated industries such as financial services, healthcare, and pharmaceuticals need to have a compliant contract management process in place. For businesses in unregulated industries, we strongly recommend that you adopt best practices in contract management. This ensures the safety of the company/business as well as the investor/client.

 Having an efficient contract lifecycle ensures that your business operations meet regulatory and compliance requirements. One, however, needs to weigh the options in the market before they purchase or sign a deal. This is why a free software trial is recommendable for software companies to adopt. In addition, the contract also contains confidential information. Effective contract management means that companies take steps to protect their contracts by storing them in a secure storage location to prevent unauthorized internal or external access.

How can contract management software help you? 

A company’s contract lifecycle is as efficient as contract management software. The contract platform provides various tools that help simplify or automate manual processes that often lead to delays in contract execution. 

ContractSafe is an easy-to-use cloud repository that facilitates all stages of the contract lifecycle. ContractSafe aims to implement quickly and deliver value in record time. Some of its characteristics are: 

  • Intuitive search and reporting eliminates the need for full-time contract librarians. 
  • Artificial intelligence helps businesses organize and find documents in seconds.
  • Smart, customizable alerts help teams renew contracts and expiration dates in advance 
  • Share and role permissions and new download notifications help managers know who is doing what.
  • High security helps businesses stay compliant and prevent data breaches and malware. • Easy integration with other third-party platforms (DocuSign, Okta / SAML 2.0, Salesforce, etc.) further simplifies operations. 

Regardless of the industry, contract management is an essential part of business operations. Contracts are the basis of day-to-day operations and an important risk management tool. As your business grows, so does the number of contracts you need to manage each year. To be more efficient and drive growth businesses must be prepared to expand their contract management resources as needed.

 Internal teams experience great pressure as businesses turn to manual systems, shared drives, spreadsheets, or other inefficient means of managing contracts. As the volume of contracts increases from year to year, so does the internal work and costs required to manage those contracts. This is why it is so crucial for companies to set up an efficient and scalable contract management process as quickly as possible. It only helps to lay the foundation for future growth. 

In conclusion, contract software provides businesses with the right foundation to extend management of overtime contracts with tools that bring organization and automation to every stage of the contract lifecycle.

Washim

Washim is an Bangladeshi tech based web blogger. Right now he writes for techshim.com excellent content Android Apps, Games and much more.

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