Why Businesses use Contract Management Software

Why Businesses use Contract Management Software

It doesn’t matter how large or small your business is, whether you have five employees or fifty employees, at some point during the management of a contract there will be someone asking “who changed this?” “has anyone seen this document?” “when is this due?” and somewhere in all of the answers, a large filing cabinet will be involved. Even if your business has moved on from a large filing cabinet in the corner of the office, a lot of data and documents will be spread over emails and files. Even smaller companies with a limited amount of contracts have a huge amount of paperwork to store safely away. Businesses who use a contract management system can centralize all this information into one safe, single, accessible location. This streamlines the documentation process and provides easy access to data and easy management of documents, contracts and legal agreements. Even if a company only has several contracts, this eliminates the need for filing cabinets and reduces human error and loss. In certain industries, having centralised storage also reduces the risk of exposure to third parties due to having all the processes, procedures and data in one location.

And then there are compliance requirements. As any compliance officer knows, trying to keep track of ever changing regulations and the unique challenges the contract management procedure can create on a regular basis, is a complex and stressful process. CLM (contract lifecycle management) software is designed to simplify that process and help protect businesses with fact-based decision making.

The use of Contract Management software compared to outdated systems and processes, means ultimately, a lot of the benefits are financial. And improving overheads and tighter cost controls are something no business should turn down. Keeping a closer eye on workflows and reducing the time spent by your employees on the actual management of contracts due to the efficiency of a Contract Management system, means that productivity will improve, which in turn improves business growth and performance. By optimizing your contract lifecycle management and using the tools included with the software, you can keep on top of any changes or ending and extension of contracts, allowing you to assess and project long-term revenue. Better resource planning is essential to the success of a business. Plus, the reporting and auditing features of CLM means you are always alert to compliance in regards to contract terms and provisions, so you can avoid extra fees and expenses.

If a business finds themselves taking on more and more contracts, each with their own extensive and complex requirements, they will often look to Contract Management software in regards to mitigating and managing contract-related risk. Businesses use this software to identify any contracts that may include unilateral termination provisions, or indemnification clauses for example. Even elaborate legal language could flag up a potential risk in the future. The software’s risk management framework can even be configured to match a business’s own risk models and processes, improving accuracy and avoiding mistakes.

Due to the ever changing nature of contracts and their deadlines and deliverables, businesses prefer an online/browser-based contract management system because it enables them to monitor any events and help the contract management process run as smoothly as possible. All that is required is an internet connection. For many businesses this was seen as an added bonus, being able to expertly manage your contracts no matter where they were currently in the world. However, in this Covid-19 world we are now living in, having a contract management system that is based online has become essential. With the majority of Europeans working from home and the rest of the world still under sanctions, access to everything you need without having to go to the office has become a game-changer for a lot of businesses. Businesses who adapt to changing situations are the ones that are successful.

Communication may not seem like a big issue for most organisations, but if a business has a lot of contracts, that means a lot of third-parties. Relationships with clients and vendors can often affect future business so it is important to keep them involved at all stages of the contract lifecycle. Contract management software allows information relating to contracts and projects to be readily available and communicated easily and effectively with all relevant stakeholders and persons. This allows contract reviews and changes to be dealt with efficiently and to the satisfaction of all parties involved. And because you have configurable access control, sensitive data and documentation is more easily shared and is far safer, with a lesser risk of documents being misplaced.

Although it seems like Contract management systems are just for larger companies with a multitude of contracts, the features of the software can often be extremely useful to a business no matter the amount of contracts. The creation of configurable contract templates can make the usually long and tedious job of writing out contracts far quicker and easier. Whilst auditing becomes a breeze as every action made in a CLM system is fully tracked in the audit logs, along with a time stamp and the user’s information. Custom reports mean you can analyse operational data and workflows, and automated reporting tracks important information and milestones relating to your contracts. You can set up trigger based alerts for these milestones and events, so nothing falls under your radar. A lot of smaller businesses are implementing the system due to the enabling of configuration of the software for only the features their business requires. Making it a useful and cost effective solution.

Due to the modern advancement of currently technology, there really is no reason not to implement contract management software to improve the efficiency of your business and to keep at the top of your game, and as your business grows, you will already have the management software system in place to deal with an expansion of contracts. Simplifying the contract process with document creation, managing commitments, better resource planning and electronic signatures really can make a difference to your organization.