There are risks associated with contracting, but many of the potential pitfalls can be avoided by adopting the right management approach and using contract management software. Here are five ways that contract management software reduces some of the most prevalent contract-related risks:
1. Keep Contract Data Centralized and Confidential
It is always important to keep contracts organized and filed, but as your company’s contract portfolio expands, this becomes critical to ensuring proper performance. It is tedious and inefficient to try to keep a handle on volumes of paper files, even with the most disciplined file management system, or to try to hunt around through various files on the desktop of an employee's computer. A cloud-based contract management solution provides companies with a virtual repository, drastically simplifying the organizational process.
In addition to consolidating the portfolio in one central location, a reputable contract management solution will offer stringent security measures to reduce the likelihood of important data becoming compromised and ensure that it remains confidential.
2. Limit Access to the Appropriate Parties
A common concern regarding data of any type is that it will be misappropriated. This can occur internally, perhaps at the hands of a disgruntled employee, or may be the work of someone externally, such as a competitor or opportunistic hacker. There are various ways to protect contract data from such an occurrence, such as encrypting electronic information, watermarking documents, and requiring non-disclosure agreements.
In general, those are useful and effective means of protection, but it is also wise to limit the dissemination of data. For example, contracts should not be saved in a location that just any company employee can access. Instead, companies should use contract management software that employs permissions-based roles, limiting access to only those parties who absolutely must view particular contracts. This decreases the possibility of contract data becoming intentionally or inadvertently misused.
3. Never Miss Expiration or Renewal Dates or Any Other Important Milestones
In many contracts, there is often an implied or stated notion that time is of the essence. This may be vague and simply mean that all contractual matters be completed in a timely fashion, or it may be extremely specific with a clearly delineated timeline for certain events to occur. In addition, contracts often stipulate specified times during which one party may take advantage of certain provisions, such as renewal discounts, the exercising of an option, or notice for contract termination.
In light of the time-sensitive nature of most contracts, it is imperative for contract management teams to fastidiously monitor important contract dates. This task is markedly easier when using a contract management solution that allows for customizable, automated alerts. Given how easy and affordable it is to implement such a solution, there is simply no acceptable excuse for missing out on opportunities or failing to comply with contractual terms because an important date was forgotten or overlooked.
4. Facilitate Contract Compliance
A large part of staying on top of key dates and milestones relates to overall contract compliance. This may entail ensuring performance on the part of your own company, or remaining abreast of a contract’s terms to confirm that the other parties are keeping up their end of the bargain. Contract compliance really comes down to continuous oversight and a keen attention to detail.
It is much easier to exert such supervision by using dynamic contract management software that is easy to setup and use and has practical features, such as a comprehensive search tool, tailored alerts, and multi-level folder options. An organized, easy to use solution helps eliminate some of the time-consuming facets of contract management, enabling the team to devote time and energy to more high level matters that impact contract compliance.
5. Retrieve and Share Contract Information Quickly and Efficiently
In today’s market, companies must be able to act and adapt quickly and efficiently to meet the changing demands of the business landscape, as well as the evolving needs of their partners and clients. This frequently requires the analysis and sharing of important pieces of information. And, it is usually impractical to waste days or weeks collecting such data and then spending more time actually analyzing it.
Using contract management software with a built-in report generation tool facilitates the quick retrieval and analysis of contract data. The information gleaned from these reports can be used to shape business strategies and shared with relevant parties when necessary, and at a moment’s notice. Ultimately, contract management software enables companies to establish a secure, centralized contract database and simplifies the oversight, retrieval, and sharing of important information, all of which helps to reduce some of the risk inherent in contracting.