Contract Management Efficiency: Make The Most of Your Time & Money
In order to be successful, businesses need to be able to focus on their core strength: the key factor that sets a business apart from all others. However, in order to focus on that core strength, businesses need to make the most of their time.
Recent business trends have focused on upgrading the technologies relating to functions ranging from customer support to quality control. Often, enterprises overlook one of the most time-consuming processes: contract management.
To learn more, read our Introduction to Contract Management Software eBook.
Enterprises that have focused on simplifying and digitizing their contractual documentation systems have reaped significant benefits by freeing up time that had previously been spent on contract management processes.
Here is a review of why you should consider Contract Lifecycle Management (CLM) software.
Understanding the Contract Management Lifecycle
If you don’t truly understand the contract management lifecycle, it can be easy to claim that you don’t need software to manage it. Some businesses fail to correctly account for the amount of time that their staff dedicates to each of the phases of the contract process.
As an exercise, share this list with your contract management staff and ask them how many hours per week they dedicate to each one of these stages of the contract process:
- New Contract Requests
- Data Capture
- Contract Authoring and Creation
- Collaboration and Negotiations
- Reviews and Approvals
- Signatures and Execution (Hardcopy and Electronic Signatures)
- Post-Execution Tracking and Management (Manage Commitments, Obligations, and Important Dates)
- Contract Reporting and Analysis
You’ll be surprised by the results of this exercise. Are your employees or team members using their time effectively? Are they focusing on the core strength of your business, or are they spending time on processes – like CLM – that could be automated?
Optimizing (or Eliminating) the Paper Trail
If you’ve done the previous exercise and gained an understanding of the time spent by manually managing contract processes, you should also consider the amount of money you spend – and the risks you take – in self-managing a paper-based system. CLM software not only reduces or eliminates paper waste, but also creates additional space by freeing up your office from complicated and bulky filing cabinets.
Instead of piles of papers that make it difficult to know which contracts need to be dealt with, you will have a simplified digital system. Additionally, the software will ease the task of keeping track of the different stages of the contract, from deadlines to renegotiations by creating alerts that you can receive electronically, mitigating your risk of missing an important deadline.
Standardizing your Document Language
By centrally controlling the integrity of your company’s approved contractual language, you will reduce the risk of unauthorized language to your contracts. Contract management software allows you to clearly keep tabs both of instances where someone has deviated from approved contract language standards and of instances where someone has approved conditions (e.g. sale discounts, spending limits, budgets, etc.) that go outside of preset thresholds.
By automating your comparison process you will save time, reduce the risk of human error, and avoid costly deviations.
Last but not least, according to a study released by the Aberdeen Group:
“…the percentage of an enterprise’s revenue that is dictated by a contract will increase from 56% to 68% on average over the next two years. The trend is clearly that enterprises increasingly want contracts in place with their customers and vice-versa. Apart from the increased contract data that needs to be monitored there is also the issue of cycle times with contract creation, negotiation and approval, which can pose as bottlenecks.”
Savvy businesses will optimize their “quote-to-cash” cycle in advance so that they are ready for rapid growth and high demand. Failing to plan in advance for busy times will result in high opportunity costs for having to forgo additional contracts and for damaging your company goodwill with sub-par performance.
Using CLM software allows you to:
- have a better understanding of the contract management lifecycle and how much manpower is being allocated to managing it
- optimize (or eliminate) your contract paper trail
- keep your document language safe and standardized
- prevent bottlenecks
Image Credit: Mohamed Hassan