Enterprise contract management is a means of streamlining and improving how contracts are stored and reviewed throughout an organization. If you are investigating contract management options, there’s a good chance you already know a manual system is insufficient for your company’s needs. The question is where to go from here.
The more an organization matches the following conditions, the likelier it is that the company would benefit from an enterprise contract management solution.
Midsize to Large Organizations
The first problem with manual contract management is its inability to handle a large volume of contracts. Larger organizations dealing with thousands of contracts cannot allocate the hours it takes to painstakingly review each one. A structured system enables you to locate the right contract in a matter of seconds. Advanced search capabilities allow employees to compare various accounts quickly and easily.
Organizations that have multiple offices and divisions also benefit from a centralized, enterprise contract management system. Localized systems turn each location into its own island. Divisions may lose bulk discounts by negotiating contracts with suppliers independently. Enterprise contract management empowers the organization to spot discrepancies and redundancies.
Companies Subject to Compliance
Healthcare is only one example of an industry that must adhere to multiple levels of compliance laws and regulations. Companies subject to state or federal oversight face serious penalties if they fail compliance standards. A misfiled or misplaced contract can lead to serious compliance issues.
Many managers already spend too much time in crisis mode, scrambling to mitigate risks before they become a liability for the company. Using a few simple tools can establish a proactive defense against risk. Set reminders for audits or other reports. Upload compliance process instructions and other documents in a cloud-based system, so that all users see important updates without having to re-download files. If a division will change structure, pull up guidelines to ensure no liability is incurred.
Also important to note is the security aspect of proper compliance. Medical records, legal records, and other sensitive documents may fall under protective guidelines. Stashing them in an unsecured folder is a risky move. Look for a system with security measures that lessen liability.
Companies Managing Complex Contracts
Another disadvantage to manual contract management is that it makes it easy to ignore contracts until they’re on the brink of disaster. Contract management is not an attractive task for most people. Contracts can be dry and lifeless. That is until something goes wrong.
The truth is, a contract is a living document. It needs attention from initial negotiation through the renewal/expiration period. Contracts may have various intermediate checkpoints and milestones in need of review. Auto-renewal can commit a company to more stringent terms without any manager noticing. Alerts can remind the appropriate account manager or counsel to check in on time.
Companies Seeking More Favorable Negotiation
Most companies don’t operate in a vacuum. They may rely on vendors, property managers, managed care organizations, and others to run effectively.
Customers or patients typically will never know the inner workings of an organization’s contract management. Vendors and other partnering businesses, however, may have a sense of how the organization operates. An organization with a reputation among other businesses for missed deadlines and other mistakes may be at a disadvantage when it comes to negotiating a new contract.
Managing contracts well can help an organization build a stronger record of meeting and exceeding contract partners’ expectations. An organization planning to expand or develop new partnerships may find that strengthening contract management is an important foundation to success with new business relationships.