Countless businesses across a range of industries continue to fail due to their inability to adapt to changes in market conditions. Whether it’s a lack of desire or foresight on their part, firms must have the vision to innovate and reshape themselves to avoid becoming extinct. One key trend defining market evolution today is the penetration and widespread adoption of contract management systems (CMS).
CMS allows firms to access and store digital copies of agreements with past and existing customers which improves cost efficiency. Data from Forrester and Aberdeen has concluded that organizations who implement CMS solutions are able to
CMS empowers firms to efficiently handle an increasing volume of contracts without increasing the risk for unorganized or immoral business practices. Consequently, the contract lifecycle industry is expected to hit $2bn by 2019 with a wide-range of firms embracing its potential to make better and smarter decisions when it comes to handling their contract. CMS solutions have a host of attractive features ranging from central repositories, alerts, enhanced security, analytic tools, and e-signatures.
These features allow firms to avoid loss of revenue and litigation and protect their brand image. Furthermore, a CMS allows companies to reinvest money saved into other technologies and improve employee satisfaction.
Provides A Centralized Repository For Easy Access
By design, a CMS database makes it easy to add, remove, and update information related to all contracts your business holds with your clients. Beyond this, individuals across various teams and divisions can quickly search for, identify, and review a contract in case there is any doubt relating to deliverables. This improves communication across your organization by preventing spread of misinformation as data can be easily checked and vouched for.
Furthermore, it saves critical manpower hours of your accounting staff as they no longer have to embark on a goose chase to locate physical copies of contracts which may lead them to resorting to guesswork when pressed for immediate answers.
Reduce Risk With Automated Alerts
Previously, many firms opted to use spreadsheets to keep track of vital information such as pending contract renewals and summaries related to interim deliverables. Though an innovative solution, spreadsheets are unable to send you alerts that divert your attention to high-priority issues. If you were to miss even one little detail, you exposed your business to the risk of losing a potential client and even possible litigation due to failure to meet contract terms.
However, CMS solutions allow businesses to set alerts which can prevent such mishaps from occurring as they notify administrators when contracts are due for renewal, upcoming milestones, or any other KPIs you may have set.
Setting terms for contract confidentiality is critical during the negotiation phase for vendors to ensure their ability to protect proprietary information. Naturally, vendors don’t want to risk having their information shared or distributed by third-parties as it could undermine their business. For this reason, vendors clearly state the consequences of violating confidentiality terms in their contracts.
Before CMS solutions, companies stored contracts in physical rooms that could be broken into leaving them helpless to external factors not in their control. Since CMS solutions store contracts in digital formats, it’s easy to lock down sensitive and confidential information contained within a contract.
User permissions can be easily created to create different layers of access rights to ensure that individuals without the proper authority are not able to access information they aren’t supposed to. Furthermore, in case there is a breach of confidentiality CMS solutions provide an audit trail to help you track how and where the mishap took place.
Access To Analytics To Drive Performance
When it comes to contract management, there is a lack of awareness of how analytics provides unique insight relating to contracts within your organization. It’s important to note that contract analytics is not limited to values such as number of contracts signed and average length of contract. Instead, analytics tools within CMS solutions provide deep understanding of how contracts affect your bottom line.
A contract scorecard provides both the client and vendor with an understanding of progress and performance of a contract. It measures predetermined KPIs and overall performance which helps visualize a contract in terms of risk and opportunity. This helps your business select contract agreements that are best positioned to be advantageous for you.
Compliance reporting forms a fundamental part of contract management as businesses need to track contract performance in order to know where leakages occur. During contract signings, both parties make compromises and perform a cost-benefit analysis to determine the worth of a contract. Instead of relying on educated inferences, contract analytics lets you make intelligent, fact-based decisions on a value of a contract.
Before signing on, you can filter the level of deviation a specific contract takes against those your business generally handles. The further a custom contract deviates, the more risk it poses to your business, and this knowledge is helpful in making a final decision.
Digital Signatures Speed Up Workflow
Digital signatures are electronic versions of physical stamps and seals of approval that ensure the integrity of a document. CMS’ features a digital signature module that let you create and add (in encrypted format) signatures to your documents. Digital signatures speed up workflow by letting you route documents directly to an individual’s inbox responsible for approval.
This hastens the approval process and doesn’t require all parties to be present during a contract signing. For example, if a contract is won while the authorized entity for signing is physically unavailable, they can easily authorize a document remotely within minutes and prevent unnecessary delays and travel costs.
Contract management is a key activity within your firm and likely an underlying source of income which is why you shouldn’t take them lightly Doing so will cause you problems ranging from loss of revenue and even legal trouble. For this reason, CMS solutions should be included in every business’s toolkit to help automate contract management.