Contract management technology can help your business — regardless of its size — transform an otherwise lengthy and difficult process into a far easier routine. Of course, implementing this technology properly is critically important.
Contracts make the world go round when it comes to running any operation. It doesn’t matter whether it’s finalizing delivery from your suppliers or a contract with a vendor to perform various services at your business. Contracts are an essential way to make sure you get things done and remain protected while doing so. Contracts provide a scope of work and expectations for any agreement.
If you’ve been in business for more than 24 hours, you already know that the process can get complicated in no time. Listed below are some recommendations for using technology to handle contract management at your organization.
What is the Contract Management Life Cycle?
The contract management life cycle is a series of steps intended to establish, negotiate, and eventually run contracts. Contracts can occur with employees, vendors, suppliers, customers, and just about anyone your organization wishes to engage in a business relationship with. Here’s a quick breakdown:
- Creation of the Contract. In an automated environment, this will include any rules-based authoring. It will also detail the expectations, products, and terms of the contract itself.
- Contract Review. Your automated management software reviews the contract. You can check that everything related to your organization is perfect before putting the document into play. This step also provides an opportunity to make notes for revisions. All parties give their approval before moving on to the next step.
- Contract Approval. This is the part of the life cycle where the contract gets approved and signed by both parties.
- Contract Execution. This is the part of the process where your software really has a chance to shine. During the execution phase of the contract is when all of the different items outlined within it are expected to be delivered and/or performed. For example, this is when suppliers will make deliveries based on agreed-upon terms. It’s also when vendors will service various aspects of your operation.
- Contract Performance. This is the point where your company and your contract managers will be responsible for determining if the vendor is meeting their end of the contract. They’ll also provide any feedback that is needed. Automation software makes this step much easier. It can automatically flag issues and analyze any problems so you can take appropriate action.
- End of Contract. As one would expect, this is the established ending point for a given contract. The contract is renewed or terminated.
Contract Automation Reduces the Need for Manual Labor
Living in our modern, technologically advanced world has countless benefits. Automation has eliminated countless outdated, tedious routines. Processes that once took significant amounts of time no longer require as much attention. Automation has even revamped the sales process. Tech swooped in long ago to help create a better workflow and offer a more efficient means of operation.
When negotiating contracts or working toward setting up deals with suppliers, automation can really help. Automation doesn’t just improve workflow and efficiency, it also helps foster better communication. It also provides increased visibility across the entire spectrum of all your contracts.
Technology Enables Reduction of Risk
Risk is something every organization has to learn to manage. Risk can manifest itself in many forms and cause significant issues if left unchecked. It’s why it’s necessary to figure out ways to not only mitigate but also drastically reduce risk whenever possible.
Risk reduction during the contract life cycle management comes down to sustainability, managing third-party risk, and assessing your suppliers carefully. With automation, you can assign risk scores or values to particular suppliers to determine if they are not up to snuff or meeting the demands of their contract. In this way, you can effectively manage risk without being detrimental to your organization.
Contract visibility is essential. It ensures that you don’t miss any information or data along the life cycle of the contract.
Additionally, it’s advantageous to be able to see what’s happening with your contracts and vendors in real-time. This gives you a little bit more leverage over monitoring potential risks and rogue spending. It’s also another area where centralizing all of your contract management comes into play. If you have quick and easy access to all of your contracts and their various aspects, you can make fast decisions. This ability also reduces negative impacts on your organization.
Realizing the negotiated benefits of a contract is one of the primary roles of contract management software. The idea behind automating in the first place isn’t just to mitigate risk and manage issues. It also serves to optimize contracts for everybody.
From your suppliers to your own organization, the ability to connect contracts together is key. Contract management technology uses intelligent resources to assess, negotiate, and renew them. This gives you a lot more power over the entire process. Ultimately, it makes your job routine — and everyone else’s — much easier in the long run.