Does every business have contracts?
From a very small business to a whooping business, all can foresee revenue increases by two-fold from the use of contracts. Thus, every business does have contracts that have the potential to increase profits and maximize value. Companies need contracts to serve the right purposes and meet goals. Contract management systems help businesses of all sizes.
Why do you need the best contract management system to deal with your contracts?
Streamlining every contract in the company using the best contract management system is significant for keeping track of the whole business process competently and effectively. Contract lifecycle management offers incredible development prospects for businesses across every industry. It helps to drive several factors like boosting modernization, competitiveness in the supply chain, unlocking new markets, encouraging socioeconomic influences, and lastly helping to take a hard look at a new way of cost-cutting.
In our previous blog, we outlined a few of the ways to automate your contract management system. In this blog, we will explain the ways how contract lifecycle management can reduce costs.
Standardization of Contract
Adhering to the standardization of contracts means to enforce a level of consistency or uniformity throughout the contractual agreement. This uniform standardization helps the attorney to draft more contracts within a small time-span. The efficiency of a business process can be accelerated by maintaining this consistency in standards throughout the contractual cycle. Not only that, but standardization also helps to reduce contract management system costs, mounting risks, compliance let-downs, and hefty liabilities.
Centralized Cloud-Based Contract Repository
The advantage of a cloud-based contract repository is that it can reduce storage costs. The best contract management system can permit contract access to the right employees. This reduces or eliminates the need to hire external experts to examine the security matter of the contract repository. This, in turn, reduces security costs.
The contract repository also helps to reduce working time as the team members do not need to search through all the files to get the right version of a contract in hand. Tracking and monitoring of files in a contract management solution are relatively easy. It is easy to know whether the document is amended or updated recently and who has accessed it. Thus, the contract repository avoids unwanted searches thereby saving working hours. In that way, it helps to reduce operating costs.
Contract Data Visibility
Contract data visibility provides team access to enterprise-wide contract repository, and offers powerful tools like contract search, automatic notifications, alerts. The contract repository allows better assessment of risk management. It also helps to proactively recognize areas of overlap or inefficiency in contract lifecycle management. Contract visibility within the organization also ensures monitoring the contract performance, status updates, and building strong vendor relationships.
Allowing collaboration and easy access to the most recent version of a contract is a highly recommended feature of the best contract management systems. This keeps the entire team working on the same version making it much easier to avoid errors. Thus, contract visibility is considered an important factor to reduce costs.
Another way for cost-cutting is to provide alerts and notifications for contract renewal. Manual renewal of contracts is a cumbersome and challenging task that may even cause things to slip through the tracks. A contract lifecycle management can set customization alerts well in advance so that the sales, legal, finance, procurement teams can take the necessary steps to avoid mishaps. Auto-renewal option helps the team to evaluate the performance of contract, cancellation, or even negotiation of contractual agreement instantly to save costs in the long run.
Some contracts have price penalties. Keeping a check on the price escalation clause is essential if the contract contains a clause that surges prices if renewal notices are not communicated by a specific date. The auto-renewal option gives alerts so that the contract team can analyze whether the contract needs to be cancelled instantly before it enters the price escalation clause.
Yet another important thing to be aware of the perpetual renewal of your service contracts is the automatic renewal clause or the evergreen clause. An unnecessary contract needs to be cancelled without further renewal procedures. If you are preparing to end the contract deal without any renewal plans, then such a clause needs to be highly focused on to avoid unnecessary expenses. Thus, contract auto-renewal helps to keep a check on such clauses and by this means reduce costs.
Picking the best contract management system with reasonable software price has its bonuses for many years to come. Try our free demo of Dock Contract Management Solution. Learn how our contract management system can reduce your operating and contract life cycle costs.
Written by Linu Mohan
Linu Mohan is a Content Developer who loves to create content with deep business insights. She provides businesses with solid ideas that can put them in a good position even in tough times. She believes in business strategies backed by intelligent technology solutions.