The reputation of any business relies heavily on its adherence to contracts. Failing to meet contractual obligations puts your business at risk of damaging its reputation. If you are running a growing company, you understand the significance of recurring business opportunities in achieving your goals. Failing to fulfill a business contract indicates inadequate contract management, which can cause irreparable harm to your business.
Did you know that inefficient contract management for business can result in a loss of up to 9% of your total revenue? Yes! But implementing contract management governance can help prevent inaccuracies and non-compliance, ensuring that your suppliers and licensees adhere to your contract terms and payment conditions.
The advent of advanced contract lifecycle management (CLM) software is revolutionizing the way contract management for businesses is handled. According to Forrester, there is a significant rise in the adoption of cloud-based contract management systems. In fact, 62% of organizations are currently planning or considering the migration of their contract management systems to the cloud.
Continue reading to discover the reasons why contract management software for business is crucial for the expansion and development of a business.
Why your organization must increase investment in contract management today?
"Contracts are the foundation of business relationships, and investing in contract management today ensures a solid structure for future growth and success."
Contracts play a vital role in various aspects of your organization, involving third-party vendors, partners, and employees. These business agreements govern a significant portion, estimated at 60-80%, of your business operations, making them essential for the smooth functioning of your business. Effective contract management for business ensures that you and your internal teams stay informed about the agreed-upon terms and parties involved.
If employees are unaware of the contract terms, it becomes challenging to ensure compliance with the benefits and obligations stated within. Lack of knowledge can lead to inadequate planning, unnecessary misunderstandings, missed deadlines, and avoidable costs. Moreover, it can even result in irreversible damage to the value of a contract.
Research conducted by KPMG highlights that poor contract governance practices can lead to losses of up to 40% of a contract's overall value. However, with proper contract management for business, you can mitigate these risks by swiftly identifying clauses or deadlines that might impact the contract's value.
Contract management empowers you to optimize and automate the management of existing contracts and the creation of new ones. It aids in cost control, payment oversight, revenue management, enhanced productivity, and reduced errors. Additionally, it provides the necessary information and tools to fully leverage outbound contracts and ensure compliance with inbound contractual obligations.
How businesses can benefit from using contract management software?
As businesses expand, their legal agreements tend to become more numerous, diverse, and intricate. Automation plays a crucial role in managing high-volume customer agreements, particularly when terms and conditions require routine updates.
Complex and high-stakes contracts often involve a larger number of internal stakeholders compared to early-stage growth companies. Unfortunately, overwhelmed contract management teams in growing companies may unintentionally overlook significant opportunities and risks associated with existing contracts or miss critical renewal dates.
The solution lies in Contract Management software!
By implementing automated contract management systems for your business, organizations can significantly reduce the time required for contract review and approval processes, sometimes by up to 90%. Contract Lifecycle Management (CLM) software assists organizations in quantifying, measuring, and monitoring the value derived from their existing legal agreements.
This enables them to maximize the benefits obtained from such relationships and make more informed assessments of potential future relationships and proposed terms. Take, for instance, the ConvergePoint software, which enables users to easily capture, process, and execute contracts, along with providing reliable insights into contractual matters, all without the need for extensive technical expertise.
Here are a few of the benefits of using the ConvergePoint contract management software:
- Offers a centralized storage system for all contracts, enabling managers to effortlessly monitor and track contract performance.
- Automated contract management processes reduce labor costs typically associated with manual contract administration.
- Enhances the efficiency and effectiveness of the contracting process, streamlining it for improved operations.
- Provides organizations with access to comprehensive data and analytics, empowering them to make well-informed decisions regarding contracts and contractor relationships.
- Incorporates robust security features to safeguard sensitive contract data.
Conclusion:
Business contracts are dynamic documents that encompass various issues, risks, and upcoming obligations, carrying numerous possibilities within their language. While the initial negotiation phase of a contract may involve a flurry of activity and oversight, ongoing management, tracking, and reporting are essential even after the contract is signed. Many contracts also include additional milestones, checkpoints, and review requirements throughout their lifespan.
In essence, organizations require a readily accessible and collaborative platform that serves as a single source of truth for their contracts. This platform should facilitate ongoing management and automation of milestones, key deadlines, and other contract-related actions. Hence, by transitioning to an enterprise contract management solution, organizations can effectively address these concerns and gain control over their contracting processes both now and in the future.
If you're interested in gaining a deeper understanding of AI-driven contract lifecycle management systems (CLM), feel free to reach out to us today and request a demo.