4 Benefits of Contract Management Software
Research from the IACCM shows that more than 85% of executives lack data or insights on key performance criteria, which prevents those executives from achieving commercial excellence. According to the same research, the use of contract management software would enable those executives to reduce the time for interpreting that data and reducing error rates.
The IACCM indicates that the appropriate use of the right contract technology results in efficiency and strength in performance oversight. Here are four benefits of the use of contract management software.
- More Consistent Contract Management Processes
In large enterprises, offices in separate locations may have different contracts and procedures for various clients. One common pitfall across contract teams is a lack of clear scope and goals across contracts. The IACCM points out that the failure to define, agree, or prioritize contract requirements impacts around 40% of projects.
Through the use of contract management software, an enterprise can standardize contract processes, including definition of scope, across large teams no matter their location. A centralized library of contract templates and clauses reduces instances of issued contracts that include language falling outside of preapproved ranges.
- Better Visibility of Activities
Enterprise contract management software allows organizations to customize workflows, including business rules, action items, and notifications. Whether its a review request, approval of latest version, or implementation of post-execution condition, any flow can be followed by any team member at any time – even if that team member is just picking it up the first time.
Through past performance metrics, team members are able to tell how long a contract process took and what past challenges other team members faced. Additionally, time stamps allow supervisors to know the who, what and, when for each contract process. This increased visibility of activities promotes accountability across teams.
- More Communication Across Contract Lifecycle
According to the IACCM, the top 20% of organizations with best contract management practices have systems in place that communicate effectively to the people responsible for implementation and management. Together with a rigorous structure, graphics, and simple language, top organizations leverage contract management software to create a culture conducive for increased collaboration.
By presenting a entire overview of the contract lifecycle for each one of an enterprise’s roster of clients, employees develop a better understanding of how their activities affect those of other employees. This allows teams to build more rapport across activities and be more invested in processes.
- Reduced Time to Detect Errors
A major challenge in large enterprises is the lag between the execution of an error and the detection of the same error. While some common minor errors in procurement may be overlooked by clients, significant errors with a material effect on a business contraction may carry legal consequences.
By customizing a contract lifecycle, an enterprise can incorporate steps for early detection, including decision maps and steps for correction and removal. Such proactive steps can effectively reduce the lead time to identify mistakes and correct them.
Additionally, a contract management system is able to create automated alerts when contract language falls outside of pre-approved ranges. These ranges can only be determined and modified by authorized administrators, thus creating proper documentation in case of an audit.
Contract management software enables enterprises to become more attractive and reliable business partners. By creating more consistent contract processes, providing more visibility into activities, increasing communication among employees, and reducing time to detect errors, organizations can adopt best practices and provide greater value to their clients.