With contract portfolios for large companies extending into the tens and even hundreds of thousands of documents, effective contract administration is predicated on an organized, proactive approach. But even if your contract administration process seems to be working reasonably well, putting some thought into how to further optimize it further can reap significant benefits: according to the International Association of Contract and Commercial Management, more effective contract management processes can help companies grow profitability by nearly 10 percent annually.
Additionally, with nearly 40 percent of contracts failing to deliver on expected financial benefits, it follows that improving contract administration can provide immediate benefits for your business.
Not sure where to start or whether your organization can benefit from improvements to the contract administration processes? Here are five signs you need to optimize.
1. You don’t know what your company’s full contract portfolio even looks like
Between employment agreements, supplier contracts, non-disclosures and countless other contract types, vast contract libraries are the norm for most businesses. Often these agreements belong to different departments, existing in various physical locations, on different shared drives and in other dispersed places, whether online or off. This can make it challenging – if not impossible – to get a handle on your business’s contract portfolio, using winning contract models to inform new agreements or improve processes. It’s a common pain point: one study found that the majority of businesses can’t locate at least 10 percent of their contracts.
But without visibility into all your contracts, it’s impossible to even start to optimize the administration process. The first step to addressing this issue is to begin to gather up the contracts you can find and then create a plan for migrating, organizing and storing existing agreements, along with all others moving forward. Even if you can’t locate all of the contracts that are already in existence, the sooner you can implement a system for new contracts, the more organized you will be.
2. Finding specific contracts (and information within contracts) takes a long time
Even if you currently itemize all of your contracts using Excel or other manual systems, you may find that you run into challenges actually finding them. That’s because while lists and spreadsheets can help you keep track of which contracts are in existence, they may not reveal much information about where each contract is located. Furthermore, even once you find the contract you need, accessing specific information that exists within it – for example, a particular contract term, supplier detail or other information – may be even more time-consuming.
If it seems finding specific contracts and contract-related information often takes up a lot of your time, look for a digital contract repository solution that offers tagging and advanced text-based search features. Unlike Excel and other list-based approaches, these tools allow you to easily search for information that exists within your contracts, homing in on exactly what you need by merely typing in a search query.
3. You’re inundated with contract-related requests
While centralizing contract administration and storage can help to improve efficiencies, this approach can introduce bottlenecks if your team must act as the primary gatekeepers to all of your company’s agreements. If contract-related requests from all teams and departments must flow through the contract management team, then it might often seem that your job is often about meeting everyone else’s needs, rather than focusing on the priorities of your own role. One way to optimize this aspect of contract administration is to make certain aspects of the process self-serve, storing contracts digitally and configuring user-access permissions. This ensures specific employees are always able to access the exact contracts or types of contracts they need without having to go through the contract management team.
4. You’re still wasting time getting ink on paper
Physically signing contracts in ink was long the standard for executing agreements. But if you’re still spending time on printing, mailing and other manual tasks related to outdated signing practices, then you’re needlessly wasting resources and slowing down contracting cycles. Even worse, delays associated with manually signing contracts can introduce additional risk to the contracting process as stalls and delays may increase the chance a contract never gets signed at all. E-signatures, on the other hand, are just as legally-enforceable as contracts that have been signed in ink. But because they allow contracts to be executed instantly, they both reduce the risks associated with delays and enable your business to start reaping the benefit of its contracts more quickly.
5. You’ve missed critical contract-related deadlines
Whether it’s missing a termination or auto-renewal date on an agreement that’s just not working out and getting locked in for longer than you’d like, or having to renegotiate a contract you’d like to extend without adequate preparation, failure to stay on top of contract milestones can be costly. At the same time, if you’re managing a large contract portfolio, you likely have thousands of contract-related milestones and deadlines of which to keep track.
An excellent way to improve the ease of tracking all of those deadlines is to proactively identify milestones at the start of each contract’s lifecycle. Then enable tools such as automatic reminder notifications—a feature included in some contract management software—to ensure you’ll always know when vital contract-related dates are approaching, and never miss a deadline again.