4-13-2016 | by Ben Fleshman
The way that contract lifecycles are executed and managed has a significant effect on the success of the company that owns those contracts. Proper management of contract lifecycles goes hand in hand with greater efficiency and a reduction in costs, while improper management causes disorganization and an increase in costs.
The best way for companies to manage their contracts is by utilizing a Contract Lifecycle Management (CLM) system. These systems offer an approach to contract management which proactively manages a contract from the initial drafting stages through negotiation and signing, management, and renewal.
Despite the importance that contracts and their proper management represent to a company, organizations on average do not manage them well. According to a study conducted by Huron, only 25% of respondents in their survey reported that their contracts are stored in a central repository, and 10% of those polled had no idea where their contracts were stored at all.i This may be a contributing reason for why 57% of organizations polled report concerns about their contract management procedures.
With such a need for improvements to be made to the way that contracts are managed, we look at some of the top ways that Contract Lifecycle Management software can help optimize the way companies draft, negotiate, and manage their contracts for a marked uptick in efficiency and savings.
The Top Six Reasons to Utilize CLM Software
Streamline Contract Lifecycle Management Process:
Proper contract management reduces the amount of time spent administering contract terms and conditions. It clearly distinguishes between the tasks of a contract manager, and a contract administrator by establishing a central repository. This central repository allows both the contract administrator and contract manager to accomplish their roles in a complementary, but independent manner.
Reduce Costs and Save Money:
Efficient contract management reduces administrative costs. It also decreases the likelihood of penalties inflicted due to contract non-compliance, payment errors which incur fees, and unintended auto-renewals. Quickly capitalize on opportunities for special terms and rebates to save your company money.
Online contract management creates a clearly visible audit trail, also increasing collaboration within your company and between your business and others. Information is more easily accessible and more swiftly distributable, which decreases the time needed to execute a contract, bringing in revenue sooner.
Avoid Litigation Caused by Contract Not being Compliant:
Clear audit trails, purchases, and other information gathered is stored in an easily accessed repository. Avoid issues of non-compliance, which could lead to costly litigation, and have proper evidence to support your position in court.
Deliver Greater Value to Customers:
Maintain customer relations by providing prompt, exemplary services. This enhances your ability to retain customers and obtain new ones as your reputation for excellence grows.
Complete Online Integration:
Integrate with such services as Google Drive, Slack, Dropbox, Box, and Salesforce in order to make your team more versatile, increase compliance, and further decrease administrative inefficiencies.
i“Do You Know Where Your Contracts are?” Corporate Counsel Magazine