Before you decide to manage the lifecycle of your business contracts, you need to understand exactly what that lifecycle looks like. Everyone knows that a contract needs to be drafted, negotiated, and signed, but that’s only a small part of a larger story.
For a company to fully unlock the value of their contracts, they need to know and incorporate these nine essential steps into every agreement.
With more data, and improved insight into contractual terms and performance, a business can optimize its portfolio for better value, lower risk outcomes. For high performance contract teams, the goal is a continuous feedback loop between the contract portfolio and business performance. If, for example, the data shows that certain negotiation issues consume a large chunk of time, but yield no measurable difference in risk or performance, you may tweak the playbook to remedy those issues quickly.
Is your company skipping any of these nine steps? If so, don’t worry; you’re not alone. At any organization, it’s easy for one person to just handle “their part” of the process and move on without understanding the entire lifecycle. Indeed, while basic contract management software can help companies improve their contracting process, they still struggle to gain an executive-level view of their contracts that answers important questions about revenue, risk, and obligations.
In a perfect world, companies could count on:
Well, that perfect world has arrived. Welcome to enterprise-wide CLM.
To achieve their business goals, leading organizations are looking beyond limited or stove piped implementations of CLM and moving towards enterprise-class platforms designed to meet all the contract-related challenges facing every department.
But what does it mean for a platform to be enterprise-wide?
Who should care about Contract Management Software? Everyone. Contracts are the mainframe for every business and every department - everyone uses them and everyone’s bound by them, whether they know it or not. For complete certainty over all contracts within your business, everyone in your organization should be on board with implementing a contract management system.
Templates, workflows, and approvals will help decrease the risk of contracts being created or tampered with outside of the contracting process. It will also allow end users and system administrators to send and receive back agreements even faster. One centralized repository with easy navigation, search, storage, and reporting functions will seamlessly eliminate any bottlenecks in on-boarding new employees or clients.
Having poor contract management in place will cause a pileup of deals, leading to delays in the sales cycle and a decrease in your revenue stream. The old’ “cut and paste” in Word method is long outdated and carries huge contractual risk.
General Counsels who don’t have a proper contract management system in place struggle with accessing and tracking contracts. Not having quick access to the data, they need may cause them to miss an important contractual obligation, a payment term, or another piece of vital information they need to know quickly.
For any technological challenges, we all typically turn to the IT department. However, the right contract management system will be intuitive enough for any user to adopt fully, freeing up time for IT professionals.
It’s no surprise that CRO’s and CCO’s are always on the go, so when they need answers, they need them fast and accurately. They are constantly analyzing and reporting on risk, the cost of managing those risks and ways they can reduce it. A few major issues facing CRO’s and CCO’s include complying with current and new standards, adherence to anti-corruption regulations, data privacy, and revenue leakage. All these challenges can be solved with the right contract management software, with full visibility to analyze and report on data, risk scoring for all agreements, and integration with vendor risk and/or collateral systems.
Often, businesses are not aware of the hidden risks that lie within their contracts and how full visibility can help them decrease it. Have you ever been ill-prepared for a major crisis, such as a compliance breach? With unprecedented visibility, you can better prepare by being able to monitor and manage your contract compliance and risk strategies through an effective contract management solution. This will help you to move towards a healthier business.