.svg)
Contracts and their administration are a central part of every business and every company.
Considering how much time and effort critical contracts require - from the timely involvement of all parties involved (internal and external) to defining the scope of the contract, the rights and obligations contained in the contract, deadlines and much more - the performance capabilities of organizations can be dramatically improved through the use of effective contract management. In addition, in addition to speeding up and improving the efficiency of an organization's contract processes, operational and financial risks can also be contained.
A powerful contract management software Nowadays, it no longer consists exclusively of filing and managing documents. This type of management software has developed significantly in recent years with the help of technology.
Software-based contract management is now able to create a better understanding of the terms of a contract and to provide meaningful data to the entire organization or to those who have the authority to review and work with the contract. This allows upcoming decisions to be made on the basis of more and better information. As a result, the implementation of set goals can be achieved in the shortest possible time.
Why you should use contract management software
Here are some of the key benefits of effective contract management:
1. Strengthening operational functions
Efficient contract management helps to simplify and improve many operational functions of an organization. The operational planning process can be better structured, as data on the business development of individual areas is available at any time and is available in a comprehensible form.
The processes and value drivers for key business areas are also easier to identify. Historical contract data can also be used to see how conditions have developed over time and whether conditions have been improved. And finally, companies can use contract management software to analyze whether the set corporate goals have actually been achieved. A simple and quickly available report can be used for this purpose.
The findings from contract management can also help individual areas or departments to optimize sales and to identify cost minimization.
2. Increasing operational efficiency
By reducing manual workload, companies can often further optimize operational efficiencies and reduce the error rate. As a result, the stakeholders involved can focus more on strategic aspects of contract management, such as evaluating contract performance and identifying areas with potential for improvement.
3. Increasing spending transparency and minimizing spending
In addition to significantly improving a company's cooperation with its stakeholders, in particular with its suppliers, contract management software also simplifies the tracking of transaction and performance data. It increases spending transparency and therefore where exactly your money is going and for what reasons.
Tracking and allocating expenses and clarifying their relevance as part of the operational value chain is often a critical problem for many companies. Higher spending transparency helps to identify irrelevant spending and reduce it if necessary. This means that by increasing cost transparency using contract software, savings potential can also be identified and realized.
4. Manage supplier relationships more effectively
Today, more than ever, suppliers are an important part of the value chains of many companies, as the majority of organizations rely heavily on selected suppliers to provide goods/services for their production processes.
Contract management software helps manage these important supplier relationships by evaluating their performance based on the criteria set out in the contracts and assessing supplier risk. It also acts as a mechanism for building long-term relationships with suppliers, as the key variables of the business relationship can be disclosed. By focusing on the really important factors of a business relationship, these can be further optimized, which can lead to valuable efficiency effects.
5. Better implementation of compliance requirements
A contract management system that sets the conditions for every contract concluded in the company significantly improves regulatory compliance by relevant, internal stakeholders. Increased compliance and sharing of best practices will inevitably help to minimize a wide range of risks within the organization.
Best practices for contract management software
To make the contract management system even more useful, companies should consider the best practices listed below. Implementing them results in additional value potential from the contracts:
Enable collaboration on contracts
For most transactions involving larger companies, the legal department is involved as the responsible department to keep an eye on the compliance or legal part of a contract. Sales or purchasing, on the other hand, are often involved to negotiate the commercial terms of a contract. To make this process possible at all, the responsible project managers must be able to access communication channels that facilitate the exchange of all departments involved.
Only through effective cooperation and communication between the legal department and the other business areas can a contract reflect the desired conditions while minimizing legal risks. Effective means of communication during the contract process also prevent the legal department from having to shoulder the entire workload and responsibility for sub-sections that are not within its area of competence.
Manage your contracts centrally online
Contract management, which not only uses the countless drawers of various filing cabinets, but is also located in an organized online system, ensures that all relevant stakeholders can access the information when needed, without having to embark on an often unsuccessful scavenger hunt beforehand. A complete system also helps to keep track of important contract information such as contract conditions, deadlines, etc., and to involve the appropriate teams in good time.
Use contract management software that allows you to secure and central contract database to create. This allows you to store and manage a larger number of contract documents and their relevant data in a dedicated archive. When choosing, pay attention to important security features, such as assignable access rights and the encryption of important contract information. The ease of using your contract database also plays an important role, especially if you need to manage contracts internally among several different departments.
Enable a continuous compliance process
Ensuring effective compliance management throughout the life cycle of contracts is not only helpful but also often business-critical. It helps to comply with regulatory/legal and corporate requirements while ensuring that financial and operational losses due to overlooked deadlines or service intervals, which could result in significant liabilities, are avoided.
With the help of AI-supported processes, modern contract management software is now able to continuously monitor any defined key parameters and provide you with helpful insights into your contract content. This not only allows you to automate your compliance process for the most part, but also allows you to continuously evaluate and improve it more easily.
