Contract Management is an underestimated step in business management. Often overlooked in comparison to other aspects that provide more tangible results, Contract Management, according to experts, is essential to the survival of a business. Adding a CLM or Contract Lifecycle Management system will aid your company in ensuring that all your contracts are properly accounted for.
At its simplest definition, what a contract management software does is the process of filing all contract metadata in a more visible and convenient format. Digital contracts open up a lot more avenues for the company to take while also drastically reducing the time needed to complete the lifecycle of a Contract.
Contracts are legally-binding documents that once signed has the power to be held as a piece of damning evidence in court. Non-compliance would not only damage the company’s reputation but also cost the companies thousands of dollars in legal fees.
Having established its importance, here are some advantages to having Contract Management Software.
Studies have found that mismanaged contracts cost companies over 9% of their annual revenue. Non-compliance of contract terms cost much more, even running the risk of pushing the company into bankruptcy. A full visual of contract metadata will ensure contract compliance.
A common occurrence during Contract execution is that certain terms are often forgotten and thus not followed. The chances of this occurring with the software involved are reduced to almost zero.
The process of acquiring contracts used to be a costly process, both in terms of time and money. By reducing the need to print out hard copies of documents, the company saves hundreds of dollars. Apart from this, having to physically meet with clients and vendors for signatures is expensive.
All changes in the contract are tracked. This makes it easier to find out who edited who and if there are any anomalies, someone can easily be held accountable instead of the usual pointing-fingers method. Keeping printed contracts under lock and key inside a filing cabinet leaves contracts vulnerable to physical harm. On the other hand, digital contracts are saved in a secure online server that cannot be physically accessed. Moreover, digital contracts can be accessed remotely by multiple people in real-time making the Approval process much faster.
Quicker Contract Signing Process
Without a Contract Lifecycle Management Software, it takes companies months to complete the full contract signing process, from inception to the execution. This is because the manual process has a lot of repetitive and redundant steps, all of which are made more efficient with a Contract Management Software.
One of the best features of Contract Management Software is Electronic signatures. These are legally-binding and is used instead of physical signatures for digital contracts.
A centralized messaging platform is provided for improved communications. Proper communication is important especially when various groups are in the process of negotiations. By using multiple messaging platforms, both parties run the risk of a misunderstanding not to mention file-sharing becomes confusing.
Consolidated Contract Data
Contract metadata is easier to find when they are stored digitally instead of having to rummage through multiple filing cabinets for the hard copies. A full visual of contract data is important for better decision making. Aside from this, it is easier to follow through with deadlines and meetings when the dates could easily be accessed instead of having to remember them.
Perhaps for startups, assigning an employee or two for contract management is still achievable. However, with expansions ongoing, it would be plain cruel, not to mention inefficient to place the heavy burden of managing all of the company’s contracts on a handful of people. A contract management software is able to easily manage all of the contracts while also providing a lot of features that would improve the company’s business operations.