Contract management is an important aspect of managing business relationships and is a critical tool used by companies to get the most out of agreement terms that take so much effort to negotiate! Organizations where no solution exists suffer quantifiable losses. Spreadsheets combined with manual approaches are old-fashioned; they lack integration to other systems, lack organizational access, lack important alerting, and can’t be scaled to match growth.
Here are three BIG benefits of a contract management solution:
#1 Risk Reduction
Enforcing and operating on the latest terms, conditions, controls and policies improve overall compliance. According to "Aberdeen Group" compliance management is improved 55% with a CLM system. Being compliant depends on traceable audit trails and compliance monitoring. Moreover, standardizing processes and procedures decreases unusual buying. The net effect is that supply chain risks are reduced and buys as a whole become less costly and more valuable. Also, policy or regulation violations can be caught and dealt with quickly.
#2 Financial Optimization
A contract management system helps to reduce legal fees and eliminate renewals of unwanted services. Enterprises that link their sourcing and contracting processes are more likely retain a higher percentage of identified savings. Buying from approved suppliers at the right times, for the right quantities at agreed-upon prices reduces “off-contract” spending or unnecessary spending. And tracking rebates can insure that all of the savings negotiated in a sourcing cycle are captured.
#3 Productivity / Operational Effectiveness
A contract management system tracks important data such as dates, and offers automated reminders and tools that let users schedule notifications as needed. By eliminating manual processes and centralizing your document repository you gain greater control and improve efficiency. Negotiating a contract is only part of the relationship. Companies need to ensure that they are adequately managing the agreements. Using the proper tools to track and monitor contracts will impact your company in a positive way, making a big difference in managing supplier relationships and spend. Ensuring the contractually correct amount of revenue is realized as early as possible can substantially impact an organization’s bottom line. The resulting ROI is typically many times the cost of implementing and operating a contract management solution. And projects are usually completed in a much shorter time.
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