Contracts are a critically important aspect of business that require accuracy and proper oversight. The entire process of monitoring contracts can be a tedious one. Fortunately, technology now allows organizations to automate this process, ensuring greater efficiency, improved compliance with legal requirements, and even cost savings.
With a proper Contract Lifecycle Management (CLM) system in place, you’re essentially able to manage a contract proactively from the beginning of its lifecycle to its completion. If you’re wondering how, here are some of the key contract lifecycle management benefits and best practices to note:
1. Proactively assess and manage risks
In business, your ability to anticipate contractual risks is critical. Issues such as missed renewals, overlooking important amendments, and tracking compliance obligations are common among companies. However, all these can be managed with a dedicated platform, which can keep you informed of these key milestones while providing ready access to key provisions.
A centralized platform that can regulate processes serves to optimize available resources and significantly lowers contractual errors.
2. Ensure compliance of reporting
Compliance is critical for effective contract management. When businesses fail to meet contractual obligations, the risk of contract termination or litigation is increased. Its effect can be felt across multiple departments in your organization. You can avoid this, or at least minimize it, by making sure you are able to properly record and document compliance as it pertains to legal requirements.
3. Access a centralized repository for important data
One of the biggest advantages that a CLM platform can provide is its ability to house all contracts and peripheral documentation relevant to it in a central repository. With a CLM platform, your company is given an unparalleled level of transparency that allows your team to be more productive and focused.
According to a study, employees typically spend 2.5 hours of their day just searching, managing, or editing documents they need. With a CLM platform, you can eliminate the need for team members to sift through paperwork manually.
4. Track compliance of agreed supplier terms
Ensuring compliance from suppliers can be difficult and time-consuming. However, it’s a very important part of managing supplier relationships. Given that, any company that is unable to enforce the negotiated terms due to poor contract management will likely suffer from cost inefficiencies.
This may also result in penalties due to your inability to comply with the agreed terms; missing cost-saving opportunities from special terms or rebates; or even incur fees from payment errors that could all have been managed with efficient contract administration. When combined with Scorecarding, Contracts Administration can be even more effective.
5. Boost contract cycle efficiencies
The traditional contract lifestyle starts when a company identifies a need for a particular product or service, and it ends once that product or service is delivered or fulfilled. The entire cycle traditionally takes a while to complete. Good procurement managers know that as they work towards completion, there are certain opportunities for improvement, including saving money, improving delivery, and reducing cycle times. A CLM platform can organize the many moving parts and help contract managers identify where these opportunities are so they can take advantage of it.
6. Enhance supplier as well as customer relationships
Your ability to manage your contracts reflects directly on your organization. After all, contracts are one of the more important documents that drive your supplier and customer relationships. To that end, you want to be able to communicate that your business is valuable, reliable, and credible.
CLM can help fulfill obligations and go above supplier and customer expectations.Contract administration tends to be viewed as tedious and challenging. A CLM platform can improve this area by streamlining the process through automation and digitization. If you would like to know how Vendorful can assist you with this process, get in touch with us today.