Contract management software has the potential to transform legal department operations and improve efficiency and productivity. It enables in-house legal teams to significantly reduce the amount of time spent on tedious contract management tasks, allowing for more time and attention dedicated to higher value activity.
But contract management software also serves another important function within an organization: risk management.
Below are some of the contract risks and concerns that can be addressed by implementing the right contract management software.
Lost or Misplaced Contracts
Contract management software provides your team with a secure online repository to store all of your organization’s corporate agreements. This means that instead of storing important contracts across various filing cabinets, email inboxes, shared drives, and computer desktops, all of your contracts are housed in one, central location that can be accessed by anyone on your team with the appropriate permissions. Allowing active contracts to float between disparate storage methods and locations creates unnecessary risk that agreements will get lost or misplaced, which makes it next to impossible to monitor and adjust contracts when necessary.
One of the most important reasons legal teams and contract managers invest in contract management software is to reduce the risks that stem from not knowing exactly what’s in a contract or where the agreement stands in its lifecycle. Contract management software drastically improves your visibility into any individual contract, but also enables you to search across your contract portfolio as a whole to identify larger trends and potential problem areas. Proactively finding and addressing these blindspots instead of getting caught off guard when they are discovered on their own can help you prevent potential issues from ballooning into significant threats to your organization.
Missed Deadlines and Opportunities
Missing contract deadlines and milestones presents a number of risks to your organization and can impact everything from revenue and spending to compliance and company reputation. For example, failing to terminate an underperforming contract or an agreement that is no longer needed during the stated opt-out window can lead to your organization wasting money on unnecessary services. Not delivering against your agreed upon obligations on time because a deadline slipped through the cracks can have a lasting impact on your company’s reputation. And not taking advantage of renegotiation windows to change the terms in an agreement to meet current industry guidelines or regulations can lead to costly fines for being out of compliance.
When your contracts are appropriately stored, organized, and tagged within your contract management system, you can easily set up alerts and notifications so you have plenty of time to take whatever action is needed within the acceptable time frame.
Failing to maintain contract compliance across your portfolio is another risk that is often avoidable with help from contract management software. Especially in heavily regulated industries like healthcare and financial services, compliance laws are updated frequently, and contracts must therefore be updated to reflect those changes. Contract management software allows users to search for specific contract language or clauses to isolate only the agreements that contain that search term. This can make the process of revising every contract related to an updated industry regulation simple and straightforward, and protect your company from the repercussions of noncompliance.
Every time a new agreement is signed, you accept the risk that a contract breach is within the realm of possibility. However, there are steps you can take to minimize the chances of a breach, including taking advantage of contract management software. As mentioned previously, using features like milestone notifications greatly reduces the chance of surprises during the contract lifecycle, and the ability to seamlessly search through your agreements puts you in a good position to catch and fix errors as quickly as possible. Knowing where all of your contracts are located and what’s contained within those agreements will go a long way in helping you avoid having to deal with costly contract breaches.
Unauthorized Contract Access
Storing contracts in physical filing cabinets or in email inboxes can leave your organization vulnerable to having your confidential contract data exposed to the world. Contract management software includes security measures designed to protect your contract data from falling into the wrong hands, including multi-factor authentication, audit trail reporting, and permission-based user roles, which allow administrators to assign various levels of access to the folders and files within your repository.
To learn more about how ContractWorks contract management software can help you reduce risks across your organization, schedule a demo today to discuss your specific needs and goals.