Implementing an enterprise contract management system results in numerous benefits: pre-approved templates and legal language that speed time to close, alerts for milestone dates, tracking of contract compliance, and analysis of contract performance, to name a few.
At the core of this increased functionality is a central repository for all contracts that allows you to modernize and digitize your contract management process.
The Old Way: Miscommunication, Holdups, and Mistakes
In companies that don’t utilize an enterprise contract management system, it’s not always easy to find a contract within the organization. Many companies without contract management software have multiple contract repositories spread among various departments or business units. This lack of centralization leads to costly delays and errors, as well as making effective analysis impossible.
“Multiple repositories can lead to duplicate and potentially inconsistent contract versions and can hinder company-wide reporting,” concludes the Association of Corporate Counsel.
The New Way: A Single Repository
A centralized repository not only eliminates the confusion that results when contracts are stored in multiple locations, it forms the foundation of an enterprise contracts management system, which enables the alerting, tracking, and analysis that allows companies to maximize revenue from contracts.
Quality contract management software will be able to handle an unlimited number of contracts, but they should all follow a basic standard. Each contract should have a general set of data fields shared by all contracts, and each specific contract type should have its own extended set of data fields. This consistency is necessary for adequate tracking and analysis. It also helps the legal and sales teams to complete contracts faster.
The centralized repository should link all related contracts and associated data, so that relevant — and up-to-date — documents for a particular contract are easily accessible to everyone in the organization who is involved with that contract.
In addition, the repository should be easily searchable for any contract documentation. The search function should include standard and user-defined search criteria capabilities, as well as full text search of all fields and documents.
Common Sense and Forward-Thinking
The logic behind a centralized contract repository is no different than the logic behind taking several filing cabinets spread out across an office — each with their own organizational system — and consolidating them into one filing system in one large file cabinet that’s in a location convenient to everyone.
A centralized repository feature in an enterprise contracts management system is the digital equivalent. It saves time in accessing the necessary information; it makes the information easier to sort through once it’s accessed; and it makes it easier to file information away accurately.
But the centralized repository can do much more than the paper-based filing-cabinet solution. Because the contract data is now gathered together in a consistent format — within a software program capable of acting on the information — the data becomes a strategic tool that enterprises can use to evaluate contract performance, identify areas for process improvement, automatically monitor compliance, review customer or vendor history, and perform other valuable functions.
The management of contract documentation can evolve from a primarily record-keeping function to a proactive business process that can increase profitability by numerous means, such as aiding in negotiating better terms for contracts, flagging revenue opportunities from non-compliance penalties, reducing sales life cycles, lowering paper and storage costs, and decreasing administrative labor.
Takeaway
Aggregating all contract data in a central digital repository that is tied into an overall automated enterprise contract management system gives an organization a way to coordinate and simplify the contracting process while also aggressively maximizing contract profitability.