contract-management How contract management software reduces costs
From small businesses to large corporations, companies of all sizes rely on contracts to protect themselves and manage every aspect of day-to-day operations. Deliveries to customers, services from suppliers, leases for premises - there is no way around contract management. Yet many companies view contract management as a necessary cost center and invest in cheap, clunky solutions or apply manual processes to manage contracts.
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Many companies don’t realize how costly manual or poor contract management processes can be - especially as the business grows and contract volumes increase. When you consider how many employees are involved in contract management and how long it takes on average to move a document through the various stages, it quickly becomes clear that these costs can add up quickly.
Investing in good contract management software can not only reduce operational costs, but also open up new revenue streams. If your organization is looking to improve its contract lifecycle management, consider the following 4 ways contract management software can reduce costs:
Improved operational efficiency and reduced administrative overhead
Contract management software helps teams reduce the time spent on the entire contract lifecycle by increasing efficiency and automation. There are often countless people involved in managing a single contract - legal, procurement, finance, sales, management, etc. The list goes on and on. If your contracts aren’t accessible and organized, your teams are likely wasting time searching for documents and juggling multiple versions. Not only is this risky, but it’s also time-consuming. Imagine how long it takes to find a document multiplied by the number of employees involved in the review process multiplied by the number of contracts your company handles annually. You can see how quickly the time adds up.
Good contract management software solves this problem by helping to automate the storage and organization of contracts. By using a centralized, cloud-based contract repository with effective search and filtering capabilities, teams can quickly find the documents they need. For example, strong contract management software is equipped with optical character recognition (OCR) technology that makes scanned documents searchable, as well as artificial intelligence that automates the storage and categorization of your documents. The end result: you spend less time searching and sorting documents.
By storing contracts digitally in a secure location, you can also eliminate the need for on-site document storage. Plus, you won’t have to worry about third-party security solutions because your documents will be safe and secure with the right contract management software.
Increased contract velocity
Contract management software increases the efficiency of your entire contract lifecycle - from creation to execution. This improvement in operational efficiency ultimately enables companies to close more contracts. The ability to move contracts through your organization more quickly allows you to win more customers (increase revenue) or implement mission-critical products or services that have a significant impact on your bottom line (reduce costs). Instead of relying on slow and cumbersome manual processes to manage contracts, you can efficiently maintain your business operations while reducing costs and achieving better business results.
Contract velocity is ultimately increased by allowing different teams to collaborate on contract management. With easy but secure access, document reviews can be completed much faster. In addition, strong contract management software can easily integrate with other third-party platforms that support your contract lifecycle, such as Salesforce. This enables faster contract processing.
Keep track of deadlines, save money
Contract management software helps companies reduce costs by preventing the automatic renewal of unfavorable contract terms or prices. Evergreen clauses can become a costly problem for companies that don’t keep on top of contract management. Manually managing a calendar with hundreds or thousands of renewal dates can easily cause things to get out of hand.
Contract management software provides an easy way to remind teams before important contract deadlines. By setting up customizable alerts and reminders, you can ensure that legal, procurement, sales, and finance are notified well in advance of automatic contract renewals so that performance delivered can be evaluated and contracts can be terminated or renegotiated. By helping your teams get ahead of unfavorable, automatically renewing contracts, contract management software can save you thousands of dollars in the long run.
When teams manage contracts in a detached manner, a whole host of significant problems can arise. Finance teams may not receive final versions of contracts, which can lead to billing errors. Project managers may not receive final project specifications, or management may lose track of different service providers.
Contract management software not only enables collaboration, but also provides an enterprise-wide view of contract status, vendors and performance. Strong contract management software offers version control and a systematic folder and tagging system to ensure everyone has access to the most current version of a contract. When all teams are on the same page, it’s much easier to avoid errors and reduce costs.
Managing contracts is expensive. Investing in affordable contract management software that helps reduce costs can save your company big in the long run and reduce contractual risk.
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