Contracts are often not managed as well as they could be within organisations, councils, government departments and not-for-profit organisations.
Even a small organisation can have hundreds of active agreements, adding up to thousands of contract terms and clauses. Then there is the added tension of ensuring the correct procedures are followed to establish the various contracts, so they comply with your procurement policy. Unfortunately, none of these procurement policies, audit requirements and contract terms carry much weight if procedures are not controlled, and agreements are not monitored and enforced.
A good contract management system can help you and your organisation to get the most out of the agreements you have worked so hard to negotiate, while reducing your exposure to risk.
Below you will find seven of the key reasons organisations implement a contract management system.
1. Greater Accessibility and Transparency
Contract management software allows your organisation to store and organise contract records in an easily-accessible, central location. This is especially true if you are working on a decentralised procurement model. Agreements can be accessed and reviewed with the click of a mouse, taking the guesswork out of finding your contract documents, and giving insight into which contracts are currently in place – no more need to waste valuable time searching for contracts in rusty filing cabinets.
2. Locate Important Data Quickly
Good contract management software allows on-demand searchable access to key data by contract administrators, managers and other stakeholders. This means no time wasted searching through lengthy agreements to find your schedule of rates, insurances, progress KPIs, etc. A good contract management system will help you to be ultra organised and to turn contract data into powerful management information.
3. Keep Track of Important Dates
Automated reminders make it much easier to stay on top of expiry dates, auto renewal dates, performance reviews, etc.
4. Good Return on Investment
Contract management software can help you to optimise contract performance, vendor management, customer management, supplier/sourcing management, contract renewals, etc. This optimisation maximises your revenue and cost savings, enabling a fast return on investment (ROI) – typically well under a year.
5. Greater Productivity
Contract management software automates and streamlines contract management processes and improves controls for optimised contract values, better governance and performance and faster work-flow cycles. It reduces the time wasted on re-work and manual workflow activities associated with the use of spreadsheets and older database technologies. It will also help you to standardise work procedures and to eliminate administrative mistakes.
All your contracts in one place makes it so much easier to comply with policies, regulatory requirements and corporate performance requirements. Ensure you select a contract management system, which is agile enough to shape around your procurement policies and management needs. It also needs to provide you with a clear audit trail on user activities. This will give you peace of mind that all boxes are ticked and signed-off to keep the auditors happy.
7. Reports at the Touch of a Button
Contract managers are under increasing pressure to provide executive management with a wide range of reports. This results in contract managers trapped for hours filling out spreadsheets, extracting key information and figures for meetings. A contract management system can empower contract managers to see their data through various filters, dashboards and tabular reports. This makes it easier to offer key reports in real time while being on the go. Also allowing more time spent on value adding activities e.g. supplier interviews) and less on non-value adding activities (e.g. formatting spreadsheets).
Securing a contract is only the first step. Organisations also need to ensure that they are adequately managing the agreement through its life-cycle. Using the proper tools to track and monitor contracts in real time will impact your organisation in a positive way, and will make a big difference in managing supplier relationships, expenses and the quality enhancement of your overall procurement activity.