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The need for contract management
For many companies worldwide, managing contracts is a very tricky and often daunting task, not to mention the impact of the pandemic on day-to-day business, which doesn't make organizing contracts any easier.
A simple end-of-contract request or finding the latest contract can definitely leave customers and employees with a bad experience when processing such a process. Contracts usually cannot be found without spending a considerable amount of time and changes to contracts may not find their way back into the company's central information system.
Today, many companies are already trying to overcome these challenges by using document management systems (DMS). However, companies that are already further along in their development process are drawing a Contract Management Software Also known as CLM (Contract Lifecycle Management), a DMS.
For companies that rely on contract management software, there are, among other things, better functionalities in terms of tracking and negotiating contracts compared to conventional DMS software. Advanced contract management software can also reduce risks on the supply chain side while ensuring compliance at all stages of the supplier-supplier relationship. Well-implemented contract management software therefore brings more business opportunities per year on average, as optimized contract processes are generally signed more and more frequently.
With an expanded set of features, effective, advanced contract management software can also be critical to success in product launch, global expansion, hiring, and other necessary activities. In the following, we list 5 reasons why contract management software can be very important for companies today.
1. Notification of upcoming contract deadlines
Imagine having to manually manage hundreds to thousands of contracts to which your company is bound — how are you going to keep up? If you don't get a message on time, the contracts may be extended on the old terms simply because there is no reasonable and easy way to determine whether the existing contracts expire in a few days or a few weeks.
The end of the contract would actually always be a perfect time to put the relationship with the current counterparty to the test. It is an opportunity for both parties to reconsider the contract and, if necessary, to make room for a better offer. Advanced Contract Management Software allows you to be notified before it expires so that you can review the contract in advance.
2. Digitalization of documents
A lot of paper is harmful to our environment. Nevertheless, many companies still rely on pulp. Imagine a paperless world where you can incorporate technology into your decisions, manage deals and contracts using a contract management system, and access them from anywhere—via your smartphone or PC/Mac, without rummaging through meters of file folders to evaluate the transaction.
3. Effective Collaboration When Drafting Contracts
Even in the 21st century, contract revisions continue to be carried out via e-mail or sometimes manually on paper. This usually costs a lot of time and money. By using a co-authoring function of intelligent contract software, you can save yourself the hassle of exchanging information across media by reading through draft contracts in the software and then immediately exchanging comments for revisions to the contract, all in one system. In addition, the software immediately separated internal comments from external mark-up without the need to delete and edit the history before sending. This allows you to focus on other strategic matters of the company.
4. Automatic booking and processing of order data
As soon as the agreements are in force, you can also immediately process orders or contract data elsewhere. Some advanced contract managers also have the ability to initiate the invoicing process.
Through this automation, the system extracts the payment terms from the contract and the number of invoices posted can be easily tracked via the system and at the same time incorrect transactions can be prevented in good time.
5. Evaluation and Contract Analysis
This is often a decisive function with which you can assess whether existing contracts should be extended at the current conditions, or whether your company has already been able to agree better conditions with similar customers. Advanced Contract Management Gives You Insights into the agreed services across your entire contract portfolio. This function provides you with valuable help with just a few contracts. With many thousands of contracts, contract analysis can make a significant difference on the income side.
