Every contract that your company has contributes to its value; even customer contracts that are still in the negotiation phase contribute to the bottom line. Yet for such a valuable asset, too many companies don’t manage their contracts to capture maximum value.
Ask yourself: How does our company manage its contracts? How are we maximizing value at every stage of a contract’s lifecycle? Are we using our contracts strategically? Do we even know where all our contracts are stored — and at what stage of their lifecycle they are at? Chances are, your answers to those questions point to an inescapable conclusion: Your contract management process is lacking.
However, even if your contract management process is relatively good, and you are actually managing your contracts rather than simply storing them, there are some signs that your process might still need some work, and you need to invest in a better contract management platform. As you think about how your company approaches contract management, consider whether any of these problems sound familiar.
1. You’ve Lost Money on Contract Renewals
Expiring contracts can cost your company big bucks. Not only is there the potential for lost business when a contract expires and a customer switches to a new vendor, but there is also the likelihood that an expired contract will spur a renegotiation, which could result in less favorable terms. With the right contract management solution in place, however, you can significantly increase your contract renewal rates and avoid expirations. According to research from the Aberdeen group, companies that use proactive contract management strategies renew 56 percent of their contracts and renegotiate 49 percent, whereas those that do not only see about a 25 percent renewal and renegotiation rate.
By the same token, using a contract management solution can also help you save money on your vendor contracts. Your company could be losing money on agreements that were automatically renewed (Gartner Research found that at least 60 percent of supplier contracts are automatically renewed) when they could have been canceled or renegotiated. For instance, your company may be paying for licenses or maintenance on software or equipment that you no longer use, simply because the contract was not managed properly. Contract management offers you unprecedented visibility into your entire contract portfolio so you never miss a key milestone or obligation.
2. Your Contracting Process Takes Forever
When it comes to drafting contracts, is your company slower than molasses in the winter? Does requesting even a simple contract, like an NDA, take a week or longer? While ensuring that contracts are correct and that all the necessary departments have approved the language and terms is vital, you don’t always have a lot of time to wait. You might need an NDA for a potential customer or investor, for example, but if you have to wait 10 business days for it, you could lose out on an opportunity. Implementing a contract management platform that offers self-service contracting via an intuitive wizard interview and template library that can speed up the process, while also ensuring that the contracts are safe, compliant and controlled by legal.
3. You’ve Had Errors in the Contracting Process
When it comes to contracting, there is really no room for error — yet it happens all the time. When contracts are shared via email or on a shared drive, it’s easy for errors to occur. Just imagine that you pull the wrong version of a contract and make edits to it before sending it on — but then realize your mistake and must start all over. Not only are such situations time-consuming, but they also increase the likelihood of flawed contracts that could prove costly to your company. A contract management solution ensures that everyone is working on the same version of a document and that all changes and redlines are tracked to provide a thorough and up-to-date audit trail.
4. You Have No Insight Into Your Contracts
Do you have an accurate picture of the risk that your contracts present to your company? Can you easily determine which contracts contain specific clauses, or potentially problematic terms? Often, analyzing contracts for specific information requires weeks or months of manual work, in which your legal team looks at every relevant contract to parse out the necessary information. This is costly and prone to errors and omissions. With a contract management platform that includes AI-driven insights, you can easily analyze your contracts and capture valuable data with just a few clicks, allowing you to get the most value from your contracts.
5. You Are Using Multiple Solutions
In many companies, “contract management” means that the sales team enters information into a CRM platform, which is then captured by the legal department and entered manually into a word processing program, which is then sent to finance, who manually enters data into a spreadsheet or other tracking program, and so on. In other words, every department that touches the contract has its own system, and the constant manual entry and toggling between programs is not only inefficient but increases the chances of error. With a single platform that integrates with your existing enterprise tools, each department can continue to use the tools it prefers, but all the contracting remains in one place, so everyone has access to the same information and data doesn’t need to be constantly reentered.