How Contract Management Software Automates Processes.
A May 2015 report from The Aberdeen Group found that enterprises with best-in-class performance in contract management have 74% more spend under management than their competition. By implementing best contract management practices, sourcing teams of best-in-class enterprises realize average yearly savings of 12.8%, according to the same report.
Among those best practices is the use of contract management software to automate contract management processes. Here is an overview of what processes can be automated through a contract management software.
- Electronic Signature
Executing contracts via regular mail is one of the top challenges in contract management because it creates an unnecessary bottleneck in the contract lifecycle. Instead of printing out a contract, spending money on expensive private courier services, and waiting for clients to mail it back, savvy contract managers can leverage e-signature technology to automate contract execution.
Since 2001, the E-Sign Act has legalized electronic signatures and has eased the adoption of e-signature technologies. Robust contract management software provides e-signature features that allow paperless contract execution. For example, Contract Logix software is fully integrated with EchoSign, Docusign, and Sertifi electronic signature software.
- Approval Workflow
73% of enterprises with best-in-class contract management practices have adopted approval workflow automation, according to the Aberdeen Group report. Through the centralization of contract templates and clauses, enterprises ensure that staff is using the latest and pre-approved versions of key contract data.
Not only an automated contract workflow enables efficient contract approval, but also streamlines escalation and exception management processes. By standardizing the available pool of contract templates and clauses, there are fewer instances when contract language deviates from pre-approved ranges. At the same time, contract management software makes the approval process much more transparent by keeping logs of timestamps and authorships of each contract process.
- Reporting and Analytics
One of the top five excuses for contract management failure is “I couldn’t get the information I needed from department X.” Contract management overcomes this challenge by keeping a centralized repository of documents and reports related to a client.
Real-time reporting is key to allow managers to make decisions under tight deadlines and prevent contract fraud. According to its latest study, the Association of Certified Fraud Examiners (ACFE) estimates that the typical organization loses 5% of revenues each year to fraud. The typical organization takes a median of 18 months to identify an instance of fraud since it first started. By automating reporting through contract management software, enterprises can accelerate detection of fraud in contract management processes. To maximize risk management, an enterprise should follow the six guidelines to detect accounting fraud in contract management from the ACFE.
- Contract Authoring
Through a paperless contract management system, an enterprise can expedite contract creation and authoring. Instead of having sales staff or managers have to wait to get back to the office to get started drafting a contract, they can get to work right away from anywhere with an Internet connection through a cloud-based or VPN-based contract management system.
When it comes to contract authoring, best-in-class practitioners in contract management have an overwhelming advantage over their competition. While only 27% of all others have automated contract creation and authoring, 77% of best-in-class enterprises have automated contract creation and authoring, according to the same report from the Aberdeen Group. Lack of automation of authoring process is an important factor why companies have less spend under management.
A contract management system allows a company to automate several process, including, contract creation, report and dashboard development, workflow approval, execution, and library maintenance. Through the automation of these processes, best-in-class contract management practitioners can achieve average anuual savings of 12.8%.