Contract Management software is not exactly a new invention. It has been around for years. Going through many upgrades, it is now more efficient for an organization. Dealing with contractors is a daunting task. There is a lot to take into consideration which is why experts recommend contract management software instead.
Here are the reasons why you need contract management software instead of relying on the manual process, which takes a lot of time, resources, and is overall quite inefficient.
Setting a system is key to creating an organized structure for your company. Going through the manual process of contract management is costly, time-consuming, and complicated. By opting for a contract management software, you standardize the entire procedure. This decision eliminates the risk of confusion and missteps.
Spend Visibility/Avoid Maverick Spending
It is essential to set a strict relationship with your suppliers. Contract management software promotes spend visibility while reducing the chances of maverick spending.
Maverick spending refers to business expense outside of agreed contracts. It could prove to be quite costly for your organization. You can mitigate this through scheduled purchasing from approved suppliers at the right quality and time, avoiding any surplus or shortage of resources.
The software also ensures that you have accurate information on your company revenue and expenditures. Insights derived from this data help business owners identify any cost-reduction opportunities.
Contracts are made literally for the sake of compliance. As legally binding agreements, once signed, the company has no choice but to follow through. It is then your responsibility to guarantee that all agreed-upon terms are met. With the massive number of conditions in one contract, it is inhumane to expect your staff to remember everything. This is why software is your better choice.
Aberdeen recently published a study (Practical Approaches to Contract Management Deployment) where one of their findings was that with the integration of contract management software, companies managed to improve their compliance management by 55%.
Non-compliance affects the business in two ways. Fines, penalties, and even opportunity loss are usually associated with contract infringement. At the same time, the reputation of the brand also takes a hit, making it harder to sign other clients.
More Efficient Business Transactions
The Contract Lifecycle process can take months with the manual process. It can be frustrating without any automation helping you out with the various processes. Also, contract management software has a lot of additional features that can help you with landing even international clients such as e-Signatures.
Better Decision Making
You can improve your decision-making by performing a thorough performance analysis of your contracts. It will be easier to identify any agreements that are underperforming and thus needs to be removed from the list of deals to renew. Any non-complying agreements can also be spotted.
You can do three things with this information. 1) Request for better performance, 2) End the contract prematurely, or 3) If you believe that your company suffered huge losses due to their non-compliance, you can sue. Of course, this still depends on the terms set during your negotiations.