Can a Contract Management Software Drown your Business?
The point of contention in this article is to understand if a contract management software can drown your business? And we say, yes, the absence of a contract management software can be very detrimental to your business.
In an organization, sales and marketing contribute significantly to the bottom line. But depending on the administration of the contract management software, the impact is variable.
Big organizations have many teams comprising of legal and contracting professionals, procurement contract managers, and so on. In addition to these teams, there is often the need for other employees to deal with contracts on a day to day basis – For example, a marketing person, who might not have the legal authority or knowledge about contractual clauses would be talking to vendors and executing contracts with them. Now, this, of course, gets reviewed by a legal professional within the organization before the contract is signed. Hence, one can observe that people from multiple departments contribute to an organization’s contract administration, directly or indirectly.
Top three challenges countered by contract management software.
No Single Source of Truth
Contract administration involves many steps across hierarchies and departments and not just legal professionals. Such dependency leads to a lot of manual actions resulting in stagnated contracting cycles, human error, and higher risk.
Lack of Visibility
Contract visibility includes the ability to track changes and amendments associated with each contract and monitor contract utilization. Legal is not the only stakeholder requiring such visibility.
Non Standardized Approach
With multiple stakeholders working on contracts, there is a lot of outdated legal language and a high volume of non-standard terms being in circulation across the organization. Apart from legal professionals, teams of paralegals and contract managers often use inconsistent legal language. There has to be a library for standard and updated legal content to maintain consistency across the organization.
Below we discuss the prerequisites of contract administration and the key to contract process optimization, visibility, and management.
Also, various technology providers provide comprehensive contract management software applications. Forrester evaluated 14 most significant vendors on 28 critical parameters in its report named The Forrester Wave™: Contract Life-Cycle Management, Q3 2016. The report shows how each provider measures up and helps decision-makers make the right choice from three dimensions: buy-side dominant, sell-side dominant, and all contract life-cycle management.
Now that we have discussed the challenges that can drown your organization’s contract process and established the importance of involving teams apart from legal professionals, let us move ahead to discuss the key benefits of a contract management software.
Forrester evaluated 14 most significant vendors on 28 critical parameters in its report named The Forrester Wave™: Contract Life-Cycle Management, Q3 2016. The report shows how each provider measures up and helps decision-makers make the right choice from three dimensions: buy-side dominant, sell-side dominant, and all contract life-cycle management.
Key Benefits of Using Contract Management Software:
Reducing contract authoring cycle time
- automating the approval process through pre-defined workflows
- Implementing clause level approvals instead of reviewing the entire contract for changes made each time.
- using eSignature to automate the signing process to avoid the hassle of scanning and uploading the documents
Standardizing contract terms
- utilizing pre-approved clauses from the clause library created by the legal team in collaboration with different stakeholders to avoid back and forth on the same
- leveraging the existing templates and updating them regularly to maintain consistency across all similar contracts
Increasing contract compliance
- enabling stakeholders to collaborate during the contracting process
- tracking utilization through mapping of AP data to the contract value
- creating templates very quickly and adhering to regulatory norms
Finally, with the evolving business environment and increasing communication with suppliers, it has become necessary for organizations to manage contracts effectively. Manual contract management process has many challenges, as discussed in the earlier blog. Furthermore, to avoid them, organizations can leverage technology and work smarter.