4 Common Contract Management Problems…and How to Solve Them
By David Parks, Director of Product Marketing
Contract management is an important function to get right for any organization regardless of size, industry, or geography. An effective approach to contract management means less risk to the business, faster time to revenue, and reduced costs. An ineffective approach results in just the opposite—unintended contract risks, money left on the table, and an inability to eliminate unnecessary costs.
We talk to prospects everyday who are trying to solve different contract management problems. In many cases, there has been an event in their business with a negative consequence as a result of a contract-related issue. And typically, that event could have been avoided with a more effective and modern approach to contract management. After all, most organizations still use manual methods for managing their contracts like shared folders, spreadsheets, and even filing cabinets. In today’s complex and digital age, those solutions just don’t cut it anymore.
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Let’s look four of the more common contract management problems we regularly hear from prospects and how they can be easily solved with our contract management software.
1. Unintentional Contract Renewals
This is an increasingly common one as more and more companies include evergreen clauses in their contracts. I can’t tell you the number of times I’ve heard from a prospect that they received an invoice for a contract they wanted to cancel only to find out they were outside of the termination window and stuck with another year of something they didn’t want. It’s a problem that’s very easy to assign a monetary consequence to, just look at the annual cost of the contract that was unintentionally auto renewed. We’ve heard from many prospects that avoiding just one unintentional contract renewal paid for our contract management software.
With our contract management solution, you can easily manage important contract dates, obligations, and evergreen clauses with automated alerts and reminders. You can set up alerts based on a date field captured in a contract, create alert rules to manage many contracts at once, and track and manage tasks to keep projects on time. You’ll never miss another date, deadline, or renewal.
2. Lack of Visibility of Contracts in the Process
It’s not uncommon for contracts to get lost in the shuffle from one desk to the next when using spreadsheets and shared folders to manage them. In fact, many prospects we talk to still use paper-based contract cover sheets to track their agreements. However, knowing where every contract is in your process and who’s working on them is extremely important for effective contract management.
Contract Logix’s contract management software makes it simple to track and visualize the real-time stage and status of every contract through its lifecycle with progress bars. You can quickly see what contracts are being requested, drafted, negotiated, approved, and executed right in the system. In addition, you will always know what contracts are active, pending, and terminated and who’s working on them.
3. Keeping Track of Contract Versions
Always knowing which version of an agreement is the latest can be a real business challenge. Is this amendment current? Did we capture all the changes in this addendum? If you can’t quickly and accurately answer questions like those then you are putting your business at risk.
When using our platform for contract management, you will always know which agreement is the latest and approved version. Our software lets you manage amendments, addendums, and terminations with the click of a mouse through an intuitive contract options feature. It also auto-tracks the history of your agreements so you are always audit-ready.
4. Ensuring Workflows and Business Rules are Followed
Being able to demonstrate and enforce compliance—both regulatory and internal—is critical for successful contract management. Whether it’s getting the right level of approval for contracts over a certain value, using specific approved clauses for contract types or geographies, or getting contracts executed within the right timeframe, workflows are key.
Intelligent contract management software from Contract Logix gives you the ability to build workflows that always comply with your business rules. You can establish automated contract workflows to ensure every step, review, and approval is followed. You can eliminate compliance bottlenecks while moving contracts through your process quickly and efficiently. And, you’ll have a digital record of every step in the contract lifecycle in the event of a regulatory or internal audit.
Effective contract management can have a direct and positive impact on the health of your business. Unfortunately, many organizations that still leverage manual methods to manage their contracts face several serious problems that create risk, increase cost, and limit certain opportunities. The good news is the four common contract management problems addressed in this article, as well as countless others, are easily addressed with Contract Logix’s intelligent contract management software solution.