Having a poor contract management practices can harm your organization’s potential profits and increase your costs. While using the right contract management software can help your company run more efficiently, many decision makers and stakeholders still don’t fully understand all of the pain points that poor contract management processes create.
Demand for Personalized Contracts is Increasing
Contracting has always required a high degree of organization and a sharp eye for detail. However, modern contract management is often made more complicated by increased demand for personalized contracts.
Personalized contracts require collaboration between different departments and the vendor or strategic partner. Many organizations lack efficient ways to manage this collaboration. Instead, several individuals work off of different versions of the same file, often causing confusion and delays.
Using contract management software makes version control simple and keeps everyone on the same page—literally.
Centralized Vs. Decentralized Contract Management
When you have your contracts stored in a single digital or physical location, it can be difficult for some team members to access the contracts and supporting documents when they need them.
If the contracts are stored on the company server, a team member working on an active negotiation away from the office may have trouble getting all the information they need.
Having a secure cloud-based system allows authorized personnel in your organization to access the information and documents they need, no matter where they are in the world. This allows you to move faster when you find the right opportunity.
Decentralized Contract Management Impedes Tracking
Businesses in 2019, manage more contracts than ever before. This is fantastic from a revenue perspective. However, a decentralized contract management process can undermine the profitability of some contracts.
- Contract renewal opportunities are often missed
- Businesses find it difficult to track specific contract milestones
- Poor oversight can lead to otherwise avoidable disputes
Some contracts go through several version updates. Some also require workflow patterns to be changed to adhere to new contractual arrangements. Sadly, decentralized contract storage and processing can make it difficult to analyze the history of a full document and implement appropriate changes in a timely fashion.
Decentralized contract management creates both information gaps and communication gaps. It leads to decision makers not having the right information at the right time.
Contract management software powered by AI can send automated alerts that keep everyone posted of critical deadlines and allow managers to easily find the exact information they need to make the best decision for the company.
Dispute Resolution & Quality Auditing
When you lack a centralized contract management system, it’s almost impossible to perform a full audit of your contract processes. You cannot know how your individualcontracts are performing against each other.
Even worse, if you enter into a dispute, just gathering all of the relevant documents and communications can become a huge drain on company resources, increasing your litigation costs.
Contract management software allows you easily run reports, so you can track different contract metrics. You can see at a glance if there is a systemic problem or if one contract is causing an unusual number of issues.
Software also makes it easier for auditors and lawyers toperform quality checks or to gather needed documents for a legal dispute.
Because AI and machine learning have come so far in the last couple of years, there is no longer a viable business reason not to invest in a cloud-based contract management system.