Last updated on February 3rd, 2020 at 04:47 am
Good contract management software is a significant investment for your business. Many small business owners put off choosing a contract management solution because they struggle to justify the expense. But the truth is that the expense of failing to choose solid contract management software can add up fast. Stop asking yourself if it’s in your budget, and start using our comprehensive guide to find the right contract management solution that’s in your budget.
1. The Cost of Time
When you don’t have a good contract management solution, you may lose more time than you realize. Consider the time you spend taking care of things that your contract management software can take care of for you:
Putting Contracts Together
With good contract management software, you can store templates that are easy to put together. That means that you won’t waste time putting together new contracts from scratch. Creating a new contract with the right software is as simple as choosing the right option from a drop-down menu. This means your team can spend more time on creative tasks.
Moving Through the Approval Process
Does your contract negotiation team know exactly how much room they have to negotiate in — and what concessions you’re willing to make? What about the points you won’t budge on? With enterprise contract management software, you can ensure that many of those boxes are checked before the contract moves to the approval process, which means that your approval team will have to spend less time checking over those details.
Searching for Data
If you’re still using Excel or Outlook to manage your contracts, that slows down your whole contract management process. You may spend an excessive amount of time just looking through those materials, trying to find the right contract. Even worse, it may be next to impossible to dig a past version of the contract out of virtual storage. With the right contract management software, on the other hand, finding your data is a snap.
If you don’t have good contract management software, malware is a real risk. Separately testing each PDF or trying to recover from an attack takes a lot of time. With the right contract management solution, on the other hand, security and recovery is part of the process. It helps keep your business running smoother.
2. Delays Can Cost You Work Windows and Revenue
If you don’t have effective contract management software, delays may become a regular part of your life. You may find that it takes weeks to move your contracts through the approval process. Later in the contract management process, you may have to leave your customers waiting while you check on compliance data. Just as bad, you may have periods when your staff sits around with nothing to do because they have to wait for your contracts to move forward. All of this costs money through wasted man-hours. It also destroys customer confidence.
A strong contract management solution, on the other hand, can eliminate many of those delays and keep your business moving. You won’t have to pay your team for sitting around doing nothing. Take a look at your team’s hourly wage, then consider how many hours those delays could cost you. For example, a construction team of 5 making $20 per hour could quickly lose $800 a day for your business if you have to pay them during a contract delay. The larger your teams, the more it will cost.
3. Lost Contracts Are a Real Risk
What is the average value you earn for a contract in your business?
How many contracts are you losing each year due to a poor approval process or bad contract management?
Every lost contract is lost business for your company. Not only do you lose the customer you were considering working with, you may lose future customers that they would have referred to your business. Those lost contracts can pile up quickly, especially if you routinely miss out on contracts due to delays or other snags in the process.
4. Late Renewals Interrupt Cash Flow
Depending on the type of business you conduct, late renewals could mean one of two things:
1) Lost contracts as your clients move on to a competitor.
2) Lost revenue while you renegotiate your renewals.
If it takes a month to negotiate a renewal, for example, but you may also lose the income that the client would have meant for your business during that month. Depending on how small your business is, cash flow may be even more important than total revenue. Not negotiating in advance puts you in a poor negotiating position. Depending on the size of the contract, this could mean substantial losses for your business — especially if you have multiple renewals coming due at the same time. Worse, you may have teams that, once again, are unable to work while you negotiate a new contract.
5. Fines and Penalties for Compliance Violations
A serious OSHA safety violation can cost your company an average of more than $13,000. Repeat fines and penalties can cost your business even more than that. Violating HIPAA can cost your business between $100 and $50,000 per violation. If you don’t have systems in place that will catch those violations upfront, you could leave your business open to substantial financial harm. A good contract management system, on the other hand, will identify those potential compliance violations before you commit them, keeping your business free of those fines.
Your contract management system is an important investment. It doesn’t just help you keep track of your contracts and make many processes easier for your team. It will save you money and ensure that your business continues running smoothly. Sign up for a free demo to see what costs you can start reducing.