Contracts are the cornerstones of a sales process; they are an inevitable part of a business that defines the relationships between parties entering into a business relationship. Almost every department and industry deals with contracts. According to IACCM, 60-80% of business transactions are controlled by written contractual agreements.
As the number of business transactions with suppliers, customers, or third parties grows, so does the number of contracts an enterprise has to manage; voluminous metadata, say, the title, renewal date, expiry date, etc. becomes a herculean task to manage.
What Is Contract Lifecycle?
Firstly a contract is created stipulating conditions from both the contracting parties. Since contracts contain important terms and clauses that govern the business relationship, they undergo a bit of negotiation and discussion before they are executed. Once the contract is executed, the contract terms are enforced. Some contracts get renewed and updated, upon which the cycle repeats.
Common Challenges in Contract Management
According to IACCM, organizations lose 9.2% of revenues due to inefficient contract management.
Limited capabilities of contract lifecycle management (CLM) approaches can make contract management time- and effort-consuming. For example, some organizations still use spreadsheets and other such tools to manage contracts.
Such approaches can lead to:
- Lengthy contract cycles – Be it approval, finding the right contract version, or collating contract data for analysis, teams will be spending an undue amount of their precious time in each step.
- Risk of regulatory compliances – When enterprises lose sight of their commitment through contract terms, it will cost their long-standing reputation.
Need for an Efficient Contract Management Solution
For enterprises that struggle to stay on top of managing the contract lifecycle, an automated and intelligent application can come to the rescue. The application helps businesses to handle end-to-end contract management thereby significantly speeding up the sales cycle.
Advantages They Offer
Contract management solutions empower enterprises by providing them complete control over the contract lifecycle. What are the key advantages that they provide? Let’s explore.
Speedy Contract Creation
Templates make things easier when it comes to drafting a contract. Properly defined risks and terms can enable enterprises to achieve their goals. Any promise made off-the-record or verbally will not legally stand if it’s not put down as contract terms. With templates that are in-built, it is easy to create different types of documents with scenario-specific clauses. Unlike PDF templates, a CLM platform can help effortlessly add parameters to clauses, sections, and templates. These templates can also be reused.
Approvals Made Easy
A drafted contract has to be approved.
- Manage Workflows – Workflows are the answer for a smooth contract cycle. A contract management system helps configure the necessary workflow that dictates how the contract will move through its life cycle.
- Compare versions – With a CLM application, it is easy to compare two versions of a document and understand the changes made.
- Contract redlining – It’s a given that there will be amendments and changes in contracts. The parties involved will be editing and commenting on the contract during negotiations and approvals. This crucial feature will make negotiations easier.
Track Multiple Contract Revisions with a Centralized Storage
What if you want to specify a new term or the counterparty wants to make changes to the contract? The contract undergoes revisions. During negotiations and approvals, various parties collaborate, and the contract documents go through multiple edits.
A contract management application can be the virtual repository of contracts you have been looking for. Imagine the time and confusion it would save when all the parties involved can access the contracts. With dedicated folders for each customer, organizations can easily access any document they want despite the volume.
With a large number of contracts to manage, it is easy to lose sight of the renewal dates or other contract terms. With features to streamline and automate each leg of a contract lifecycle, CLM solutions eliminate the inevitable human errors that creep in while managing a large number of contracts.
- Get Insights on Contract Metrics
Many applications come with a unified dashboard that provides a quick view of the status and types of contracts, when they expire, amendments, contract value, and department-level views. The metrics provide comprehensive visibility throughout the life cycle and help maintain compliance to contract terms.
- Leverage Auto Notifications
Apart from being able to see information on the contract expiry, you can also configure notifications and reminders. The notifications pave the way for responsive users who are always at the top of their game by avoiding delayed payments or late renewals.
Effortless Contract Execution
Signatories using the application that is integrated with e-signature platforms can just sign digitally. Imagine the time it would save against a cycle that involves printing the contract, signing it, and sending it to the concerned party.
Factors to Consider While Choosing a Contract Management Application
Okay, you’re convinced that such an application can help your enterprise. How to choose one now though?
- Adaptability – When you make a switch from your previous methods of contract management to a new application, the application you chose must be flexible enough to be integrated into your existing systems.
- Scalability – The bigger your organization gets, the more contracts you have to manage. Sometimes, you might want to extend the application to other functional areas. The solutions with low-code capabilities can be scaled with very little effort.
- Facilitate Collaboration – An efficient CLM solution should facilitate relationships between the contracting parties. It should easily be accessed by multiple users.
Instead of playing catch-up with poor contract management approaches, a smart and robust application can make you a go-getter in the contract management space. If you would like to adapt to an intelligent solution to make CLM a breeze, you can explore how Vuram’s Contract Management System can help your enterprise. It is one of our latest launches; it is an easy-to-use plug-n-play solution armed with capabilities to streamline and automate enterprises’ CLM. The solution is 100% web-based and can be easily integrated into your existing system; you can get started in a couple of weeks.
You can write to firstname.lastname@example.org for more information.