Contract management, while initially difficult to implement, is something that saves companies a great deal of time and money in the long run. Most companies begin to implement a contract management process relatively early on, be it a filing cabinet, spreadsheet, or some other system.
As a company grows, it might consider a purpose-built contract management solution, bringing with it an additional set of benefits. Regardless, business leaders in charge of a company’s contract management process must ensure that the system they employ will help the company to achieve the following goals:
Maintain Value and Quality
Value and quality pertain to a company’s internal and external operations. Internally, employment contracts establish expectations. In general, as long as employees abide by the terms set forth in those contracts, a company should be able to maintain the quality it expects to deliver and consequently add value for its clients.
Stay on Top of Compliance
This one is pretty straightforward. Utilization of an efficient contract management system will ensure that companies remain abreast of important dates and milestones within various contracts. By doing so, companies can ensure they comply with their contractual obligations.
Contracts lay out the terms and prices for an array of goods and services. Companies must know how much they are paying as well as how much they are charging, and routinely compare those prices to those offered by competitors. In addition, by monitoring price renewals and potential fluctuations, companies can renegotiate contracts, revise their budget, or reallocate funds, as needed.
In order to be productive, processes and systems must be streamlined. And, company procedures must be clearly conveyed to employees, with responsibilities delegated appropriately. Contracts obviously contain terms and conditions that may require action on the part of certain personnel, so it is imperative that this sort of contractual information is monitored and communicated regularly. By staying on top of a company’s contractual clauses and ensuring the appropriate actions are taken, companies can boost their productivity.
These are broad objectives, and achieving all of them may not happen quickly or simultaneously. It is possible that these goals will only pertain to a certain department within a company or several departments, and not necessarily the entire business.
There are some clear indications that a company’s contract management process is working, and these may be visible on a macro (company-wide) or micro (department-specific) level. Increased efficiency, reduced expenses, and improved contract compliance are a few of the signs that indicate a company is moving in the right direction.