5 Ways You Will Reap the Rewards of Contract Tracking
After working diligently to negotiate a favorable contract, it’s important to get the most out of the agreement. Using contract management software to proactively track contracts offers multiple benefits, from reduced risk to increased savings and more. Here are just a few rewards of contract tracking.
#1 Share Contracts Easily Between Departments
Contracts often require input and oversight from multiple parties. Upper-level leadership want to ensure that a contract meshes with company performance goals. Legal counsel need to review every update, even something as seemingly insignificant as correcting typos, and conduct reviews when compliance regulations change. Sales and financial departments want to review a contract's profitability for the company. This is not to mention that signing parties outside the company also need to be able to access the files. In a manual system, departments often rely on email or fax to communicate updates. It’s understandably challenging to maintain a clear, accurate idea of what problem spots may exist in the contract when you're not certain which version the other party is viewing.
#2 Eliminate Unwanted Contracts
Managing a few dozen contracts is one matter. Managing a few thousand is definitely another. If an organization relies primarily on manual contract management, it’s easy for redundant or underperforming contracts to linger in the system. As long as a contract isn’t causing obvious problems, it might escape notice, even if the account no longer benefits the company.
Improving automated contract tracking enables administrators and contract managers to review contracts more efficiently. It’s easier to compare similar contracts to assess which are needed and serving the organization well, and which fall short of expected performance outcomes.
#3 Improve Spend Visibility
When it comes to measuring value, you can’t more clear than tracking money saved. One important aspect of contract management is overseeing spending in the organization. Consistently tracking vendor contracts can reveal off-contract spending and identify the best times of the year to bulk-order certain supplies. Tracking benefits like rebates improves an organization’s ability to take advantage of money-saving opportunities in the contract. With thorough tracking and review, you may be able to use contracts to assess how well the organization is allocating certain financial resources.
#4 Shorten Project Timelines
Despite best intentions, sometimes projects fail to meet the milestones parties agreed on at contract signing. Unexpected project delays can have a significant negative effect on the business, from incurring additional costs to disappointing the end clients.
The terms of the contract may include intermediate checkpoints. By using an automated tracking system as an aid to conduct periodic reviews, a contract manager may identify the first missed milestone and make any needed adjustments to the project’s progress before delays get out of hand.
Contract tracking may also save the company money if a project delay is unavoidable. Ideally, your contract includes stipulations such as penalties if the other party causes delays in the project timeline. But if no one is tracking contracts to review agreed-upon milestones and other conditions, these clauses may never be enforced.
#5 Optimize Management Control
Sometimes, companies are hesitant to adopt an automated contract management system because they fear they will lose control over the contracts. In fact, the opposite is more typically the case. Tracking tools help departments avoid missed deadlines, improve ease of compliance monitoring, and track important changes and communication about the contract. Managers have a better at-a-glance view of contract progress and performance, which can benefit the organization as a whole.