Benefits of Contract Management
Contract management involves all stages of the contract lifecycle, from negotiation and creation to approval, resourcing, renewals and performance. Organizations use strategies, techniques, and principles to streamline each stage of the process. Streamlining any stage can improve customer journeys, increase response time, reduce administrative overhead, and improve business metrics.
Managing contracts can mitigate risks for businesses, improve relationships with suppliers, and enable compliance with legal regulations. It can also encourage people to adhere to contracts by offering explicit expectations and consequences for breaches or delays.
Ensuring compliance with contract requirements is essential to a company’s success. It gives companies more power in litigation disputes and helps them save money by reducing undocumented expenditures.
Effectively enforcing contract obligations can also help companies spend their money more wisely. For example, if a publishing company hires a contract editor who continually misses deadlines, the publisher can include consequences in the contract for failing to meet the agreed upon dates. This can help the business recoup costs associated with the employee’s failure to adhere to their obligations.
Automated, digitally-enabled contract management systems make it easier to manage contracts across the entire enterprise, removing the need for fragmented processes, inconsistent language, and disconnected workflows. Integrated contract authoring tools, collaboration portals, and automatic routing ensure a faster turnaround time on contracts while collecting data to identify bottlenecks and prioritize tasks.
Collaborative redlining and commenting makes it easy to edit terms in real time, without passing the document back and forth over email. This eliminates the need for a manual approval process where documents are taken offline, reviewed, and resent.
A contract management system can also provide version history that shows the latest changes made to the document, enabling users to track down ambiguities. This keeps contracts future-proof and avoids any changes that could negatively impact the integrity of the document.
Using a contract management system can also improve internal communication and coordination. It allows stakeholders to easily access and collaborate on contracts, share insights and recommendations, and keep track of their responsibilities and deliverables.
As a result, people in the organization can focus more on their jobs and less on paperwork. They can also work faster, since they’re not spending their time wasting away looking for or re-entering data.
It can also improve the accuracy of financial metrics and prevent the spread of “maverick” spend, a major issue that plagues many organizations. With a contract management system in place, organizations can track costs and expenses from every source of income.
The more accurate these metrics are, the better they can be used to help businesses determine where savings can be found. Moreover, they’re more likely to detect and address issues before they become serious.
A well-designed contract management solution also makes it easier for in-house legal teams to manage contracts more effectively. It provides level setting and benchmarking that improves their efficiency and predictability, which enables them to more appropriately allocate resources and execute broader initiatives.