Elements of successful contract management

As any successful business knows, Contract Management (CM) and resource planning can be complex without a sound system in place, and with companies wanting to do business and compete in global markets, technology to cope with the increasing demand for business transactions is rapidly becoming vital to growth. 

As the number of vendors in your business ecosystem expands, so does the amount of contract management. Smaller businesses may be able to manage an entire contract lifecycle for several contracts, but mid to large-level enterprises would struggle to correctly manage the number of contracts involved or cope with any expansion. According to the IACCM, the amount of revenue lost annually due to poor CM is around 9.2%.

So, what are the key elements to successful Contract management? 

Assessment of risk

Before any contracts are drawn up, there needs to be an accurate assessment of any risks a third party may pose. Conducting due diligence is vital if you want to have a successful relationship with a vendor. Having a successful framework in place to compile the information you need from data sources specific to your business can be the difference between a successful contract lifecycle or a contract that harms your business.

Contract creation

Having standardized language and pre-approved contract templates that can be configurable to specific clauses and regularly updated improves productivity during contract creation and helps ensure compliance with any legal or regulatory rules. A library of standardized terms and clauses can help identify contracts that may include particular provisions, which will help your CM later in the process.

Signatures

With the advanced technology currently available, contracts are continually being moved online, and with climate change a big issue, many clients are now being attracted to companies that have better eco-credentials and are being “green.” This means that most companies are becoming paperless. E-signatures are becoming increasingly popular to help quicken the contract approval process and add an extra level of security. If you want your CM to succeed, having e-signature software may be a crucial element moving forward.

Documentation

Once contracts have been negotiated and signed by all parties, all corresponding data and documents must be stored in an accessible yet secure location. Deloitte has calculated that 90% of all data was created in the last five years, thanks to the quick advancement of technology and business. As such, it is no longer practical or efficient to store information together physically, or as most companies now do, across various databases. The amount of documentation and data required for each contract is a big part of why manually managing agreements often falls short as a system. The risk of loss and human error is understandably high if all your information is spread over several shared document sites. It is also hugely inefficient when trying to maintain sustainable business growth and productivity.

The solution is to have all your documentation stored in a central repository. This allows for easy accessibility, and by collating all the individual documents and information, you can have tighter control of the contract process and reduce the risk of human error and loss of crucial documentation and data that could potentially cause harm to your business reputation and revenue.

In terms of compliance, with the new GDPR in full force, having complete control over what documentation and data is stored is beneficial in keeping compliant with regulations. So, a central repository is a critical element of not just successful CM but your business as a whole.

Auditing and monitoring

Successful CM does not end with the signing of the contract or with the process for which the contract is stipulated. It is essential to continually audit your third parties for both the success of your business and to reduce the risk of litigation and fines, which can have devastating financial consequences. Regular auditing and reviews protect the company from non-compliance and minimize risk. However, if you are doing this process manually, the time involved in continually monitoring each individual vendor can be costly for finance and productivity.

By continually managing your contracts and outcome, either manually or by using automated software, you are less likely to miss the end of contracts and renewals. By using KPIs and analyzing operational data and workflows, you will have a complete overview of where improvements can be made. Having all your data from processes in one place can also help your business plan for future agreements by predicting any possible third-party risks or solving issues quickly, such as bottlenecks in the system or missed deadlines.

Implementing CM software

Although it seems like Contract management software would only benefit larger companies with a multitude of contracts, the features and tools of the software can often be extremely useful to a business no matter its size or the number of contracts. The creation of configurable contract templates and standardized language can make the usually long and tedious job of writing out contracts far quicker and easier. While auditing and compliance become less complex as every action made in a CM system is fully tracked in the audit logs, along with a time stamp and the user’s information. Custom reports mean you can analyze operational data and workflows, and automated reporting tracks essential information and milestones relating to your contracts. You can set up trigger-based alerts for these milestones and events so nothing falls under your radar. The software can be integrated into existing ERP systems, and you can also configure the software so you can implement only the features your business most requires. This makes it a valuable and cost-effective solution.

Due to the modern advancement of current technology, there really is no reason not to implement CM software to improve the efficiency of your business and to keep at the top of your game. If your business expands, you will already have the management software system in place to deal with any expansion of contracts and vendors. Simplifying the contract process with document creation, managing commitments, better resource planning, and electronic signatures can really make a difference to your organization.

How can Unit4 Source to Contract by Scanmarket help your organization?

On June 1, Unit4 announced the acquisition of Scanmarket. Read the press release to learn all about it.

Learn more about the Unit4 Contract Management by Scanmarket software and how we help our customers meet their objectives that generate long-term value. Book a free personal demo now, and we can take you through the benefits we can bring to your organization.