Everything relating to contracts involves an element of risk. Contracts essentially govern relationships between parties – setting out obligations and requirements, timeframes and penalties – and business relationships are inherently risky propositions. When your business enters into a relationship with a supplier, customer, or employee, it is taking on the risks connected with the relationship – and those risks can cause significant damage to the enterprise. Risk can relate to finances, security, brand integrity and legal areas, all of which are key parts of the future success of your business.
This is why risk management is such a vital part of the contracting process. By mitigating and managing risk, you protect the integrity of your business and your business relationships. But, this is not the only benefit of risk management. The processes you need to put in place in order to manage risk effectively also have the benefit of helping you achieve a number of other things, because they all revolve around increasing efficiency.
The relationship between effective risk management and efficiency
Greater efficiency is something to which all businesses aspire, simply because it delivers many advantages. An efficient operation is streamlined, with tasks taking less time to complete, thereby releasing resources to be deployed in other areas that potentially generate revenue. More than that, though, efficient operations are those in which risk is minimized through tighter controls.
In the course of business, risk is increased when processes and procedures within the organisation are made more complex, for example. If basic administration is unfocused and reactive, rather than streamlined and proactive, then there is a greater potential for error, dispute and conflict. Likewise, if the contract creation process is too broad in its negotiation and lacking in detail and due diligence, then the risk of contract issues and damage to your business is significantly increased. That means, when we talk about effective risk management, efficiency is a core element of that goal.
So, with effective risk management and efficiency being so closely related, what can risk management help your business to achieve?
- Faster sales cycles
Increasing efficiency throughout your contracting process not only mitigates risk, but it also speeds up your sales cycles. By streamlining the way in which contracts are created – with centralization of documents, standardization of language, and secure, remote access – your legal agreements can be negotiated, signed and enacted in a shorter timeframe, releasing personnel to make the next sale sooner, while keeping risk to a minimum.
- New business opportunities
In order to manage contract risk effectively and efficiently, your contract collection needs to be stored in a single location. An additional benefit of this is that customized filtration and reporting can surface new business opportunities that were hitherto unidentified. Data analysis processes applied to a unified information source can make new connections visible and highlight unexploited intellectual properties that have the potential to boost revenue.
- Increased staff productivity
Increased efficiency releases resources for better deployment, and this is as true for staff as it is for supplies and utilities. By automating basic administrative tasks, risk associated with human error is minimized while staff are reinvigorated with new challenges. Increased staff productivity is a straightforward way to boost revenue, ensuring that the impact of risk management processes is visible in an improved bottom line.
- Increased compliance
Compliance is a vital part of risk management in all business areas, but especially in Contract Management. To reduce risk of conflict and dispute, high levels of compliance must be assured – meaning compliance with external and internal regulations, as well as compliance with contract obligations. The consequences of incidents of non-compliance can include financial penalties as well as long-term reputational damage, but the application of effective risk management strategies along with increased efficiency means that compliance is prioritised and achieved. Increased compliance therefore reduces the costs associated with failures in this area, while also boosting reputation and relationships to a more productive market space.
Managing risk with Symfact
Symfact Contract Management Software is designed to support the risk management efforts of your business, as they relate to your contract collection. With a range of cutting-edge technology and tools, the browser-based platform delivers end-to-end control of the entire contract lifecycle, enabling your business to take an effective and proactive approach to risk mitigation.
Higher levels of efficiency are created with a centralized repository, which turns your contract collection into a unified data source. This allows for the streamlining of the contract creation process, as well as general contract management, because everything required is stored in one digital location. This includes a library of editable templates, which supports the standardization of agreed and approved corporate language and amendments – further reducing both the time spent on contract drafting, and the risk of human error. These processes can result in faster sales cycles for your business, and therefore boosted revenue.
Powerful and customizable reporting tools within the Symfact platform transforms your collective contract information into actionable data that can then be mined for new business opportunities. In terms of risk management, the reporting function is central to any contract performance reviews or audits and can be used to highlight any incidents of non-compliance, or any contracts that are under-performing. Those contracts that are under-performing can be addressed in a timely fashion, reducing the costs associated with increased risk, and halting any drain on resources that the contract may be creating.
Automated workflows further reduce the risk of human error, and the risk of missed deadlines, milestones, or opportunities for renewal or renegotiation. This efficient system ensures that the right task is assigned to the right person at the right time, keeping your business in a proactive phase, and allowing for any issues to be identified at the earliest stage. Releasing staff resources in this way enables teams to engage in more challenging roles, making them more productive. Increased productivity generates increased profitability, which is one of the biggest goals for any business.
Contact Symfact today to discover what risk management can help your business to achieve.