Till now we discussed how the contract life cycle management process can be made efficient by leveraging technology to automate contract creation, encourage collaboration during contract authoring and negotiation, create contract repositories to store all the contracts and manage metrics to track contracts. This brings us to the last step in the series.
Step 5 in managing contracts efficiently is – AUDIT CONTRACTS
As the supply chain goes global the need to manage risk becomes imperative and the process to audit contracts complex. Auditing contracts regularly helps to identify if the quality/quantity of the goods is as negotiated, the delivery terms are adhered to or not and compliance with any other terms & conditions were met. It also improves visibility into the areas like;
- Currency Change and Conversion
- Volume Discounts
- Buyer Turnover
- Clerical Errors
- Carryover provision for Replacement Contracts
With a collaborative effort involving all the concerned stakeholders contract audit objectives should be defined. Technology can be leveraged to manage and set up an audit process that will enable audits at regular interval.
Learn More: Zycus iContract Solution
The benefits that can be realized from auditing contracts include;
- Cost recoveries
- Process improvement savings
- Fraud prevention
- Detection and identification of hidden risks
