Contract management is more than organizing your corporate agreements and tracking important dates and deadlines. A strong contract management process also incorporates performance monitoring and reporting, which provides greater contract insight and opportunities to optimize your processes going forward.
Analyzing past contracts and reporting on the results can help drive your strategy for future contract negotiations, while also demonstrating to stakeholders what's working and what isn't.
Below, we’ll discuss 6 reasons why reporting is critical for contract management success.
1. Learning from past mistakes
Some of the most common difficulties surrounding the contract management process are:
Missed deadlines or opportunities
Budget and timeline overruns
The good news is that each of these issues can be fixed through diligent contract management reporting. By identifying when and how these mistakes occurred in the past, you can take corrective action to avoid a similar fate for your future contracts.
Alternatively, if one of your previous contracts was particularly successful, you can repeat the process, going back to what has worked well in the past.
2. Identifying positive or negative trends
Contract management reporting doesn’t just help identify problems at any given point in time - it can also help establish and track historical trends, finding patterns in data and key insights.
For example, if you’re determining what to do with a contract that’s coming up for renewal, you can look back and see how similar agreements have performed in the past to help decide the best course of action.
3. Reducing future risk
Contract management reporting also reduces future risk by enabling you to make smarter, data-driven decisions about the contracts on your plate. While it’s never truly possible to expect the unexpected, contract management reporting can help you respond more quickly and effectively to unforeseen circumstances, or even take corrective action before a minor issue spirals into a big problem.
4. Deciding which contracts to terminate or renew
Despite your best efforts, not every contract turns out to be a clear winner for your organization. But how can you distinguish between contracts that you need to terminate and contracts that are still worth renewing - or that simply need more time to mature?
Contract management reporting gives you the facts and data needed to make these important business decisions, and ensure you're only renewing agreements that are needed and have the best chance of positively impacting your business.
5. Continuing to optimize contracts
Your contracts are too valuable to simply “set and forget” them. There are multiple ways in which you can optimize the contract management process: cutting down on material and service costs, shortening negotiation cycles, improving compliance, and more.
However, understanding how best to optimize your contracts is a lot more difficult without being able to back up your gut instincts. By collecting metrics and setting KPIs to monitor contract performance over time, you can get the information you need to make the right call.
6. Sharing key metrics and insights with internal stakeholders
Effective contract management requires clear communication between all parties. In large organizations, however, this can be difficult to achieve - the legal, IT, and marketing departments may rarely (if ever) cross paths, even though all of them may be equally affected by the same contract.
To combat these problems of introspection and siloing, contract management reporting provides a straightforward way to share key information and trends with everyone who needs to see them.
With the right contract management software, contract reporting becomes a simple, painless process. Custom reporting options allow you to save, schedule, and share reports on any of the data tagged in your contracts, eliminating much of the manual work that would otherwise be needed to deliver meaningful contract metrics.