Optimizing contract management processes can help businesses improve bottom lines by nearly 10 percent annually, according to the International Association for Contract and Commercial Management. But of all the optimizations that can be implemented throughout contract lifecycles, one of the most impactful may be a contract management system using a dedicated software solution.
What makes employing a contract management system such a powerful way to drive value and reduce risks? Keep reading to uncover the three main benefits of a contract management system.
1. Your contracts will stay organized - so you can find them when you need them
Simply knowing where your contracts are may seem like the most basic part of contract management. But a surprising number of businesses can’t even manage that, according to a Journal of Contract Management report.
Even if your contract isn’t technically “lost,” there’s a good chance that it’s buried under piles of paper or filed away haphazardly, requiring hours of searching should you need to retrieve it for any reason. These approaches might sound sloppy, but they’re fairly common. And even if you think you’re being diligent and organized by cataloging contracts using Excel spreadsheets or other similar methods, you still could run into challenges finding a contract if it is not stored where the spreadsheet notation says it should be, if a version of your catalog is overwritten, or if some other issue arises.
But being able to efficiently access contracts under both routine and extraordinary circumstances is paramount for effective contract management. It’s important to be able to reference a contract periodically as needed to ensure that you are meeting the obligations contained within; and should a potential breach or other issue occur, you’ll definitely want to be able to review the document as quickly as possible to mitigate your damages.
A contract management system makes it simple to keep documents centralized and organized. Instead of storing contracts in disparate locations - in desk drawers, filing cabinets, on various SharePoints and file-sharing platforms - contract management software allows you to upload all of your contracts to a single, cloud-based location where you can organize them by type and category, and search based on keywords or other data within the contracts. As a result, employing a centralized contract management system can shrink the amount of time required to locate a specific contract from hours or more to seconds.
2. A contract management system can ease data security fears
As the prevalence and severity of data breaches continue to grow, data security is becoming an increasingly important corporate priority. And enterprises must be as concerned about protecting the contents of documents pertaining to their own business deals as they are about their customers’ information.
Business contracts contain lots of highly sensitive data, from customers’ personally identifiable information - subject to an increasing number of compliance requirements - to trade secrets. As such, it’s crucial to protect these important documents from improper access, both within and outside of your organization. A contract management system that employs robust, multifaceted security tools can make protecting your contracts simple. This is because instead of approaching security on a separate, add-on basis, the controls you need are baked in. Additionally, because a contract management system keeps your documents centralized, you can rest assured that the tools embedded within your solution are automatically being employed to any and all documents within your database, instead of a patchwork of solutions that only protects the documents you remember to safeguard.
Not all contract management systems offer the same security features. To best protect your documents from both malicious and unintentional breaches from any source, look for a solution that takes a multifaceted approach to data security, with features that can reduce the risk of unauthorized logins, breaches at the datacenter level, and other problems.
3. A contract management system means the end of missed milestones and other obligations
There are lots of ways failing to closely abide by timelines set out within your contracts can be costly. For example, you may miss out on opportunities to earn financial incentives by delivering early (and incur penalties should you deliver late), or you could get locked into unfavorable terms should you miss an auto-renewal date. The problem is juggling every deadline and milestone can be a difficult task for individuals and teams responsible for managing high volumes of agreements. Furthermore, if the action item is reliant on other individuals within your organization, having to track them down and remind them of their obligation can be a frustrating time suck.
Your contract management system can help you say goodbye to missed milestones because it takes the work out of remembering every minute obligation that must be met. If your solution includes automated notifications and reminders, then a little up-front configuration is all it takes to reduce the risks. Simply enter and assign each action item at the start of each contract and rest assured that you’ll be automatically reminded when the appropriate time comes.