Poor Contract Management Costs Companies 9% — Bottom Line

Research by the independent International Association for Contract & Commercial Management (IACCM) indicates that companies struggling to maintain stakeholder returns and profitability in harsh economic times could well be missing a trick. A massive boost to bottom line figures can well be achieved by focusing on an often neglected discipline: Contract Management.

The report points to five major types if inefficiencies suffered by organizations that have yet to gain full control over their contract life-cycle management process:

1. Lack of streamlining – the lack of a consistent cross organizational contract management process fathers a range of detrimental effects, ranging from costly miscommunications, to the inability to properly create, review and approve contracts. When departments within an organization use different processes to manage their contracts, the ability to create meaningful organizational reports regarding the state of its contracts, is severely compromised.

2. Loss of time – A fragmented contract management procedure spells delays. These include: contracts sitting on desks waiting to be moved forward, draft revisions floating in email limbo, searches for the latest version, and searches for hard copies just to name a few. The ALSCG report reckons that “10% of all executed contracts are lost”. Delays don’t mean just losses but also damage to customer/vendor relationships, and possible compliance issues.

3. Difficulty in locating documents – from our personal experience at openSourceCM most companies we’ve researched do not rely on a centralized document repository. This fact alone makes locating documents within the organization exponentially more difficult, and as a result literally impossible to manage properly. “Being able to quickly locate contracts” is a recurring need amongst companies we’ve interviewed.

4. Compliance – A difficult and constantly changing task, compliance is nearly impossible when walking in the dark. According to the report, penalties levied on companies due to lack of compliance have skyrocketed over the past decade. Poor contract management results in revenue leakage that goes well beyond the non-compliance related penalties.

5. Lack of performance benchmarking – The ability to evaluate contract management performance can tell companies where they are bleeding from. A single repository solution can offer consistent and standardized meta-data on which meaningful reports can be based. Combined with extensive audit trails, these reports can help recognize problems in time to repair them in time.

The opensourceCM SaaS based solution provides all of the above and much more. It offers a (single sign on) and encrypted secured access. Any folder in the platform can turned into a Negotiation Deal-Rooms available only to users permitted to access it. opensourceCM offers API (Application Processes Interface) connectivity to a wide variety of applications such as BOX.COM, SalesForce, MS-Dynamics, NetSuite, OKTA, QuickBooks, Zoho CRM, Dropbox, DocuSign to mention just a few.