Benefits and Best Practices of a Contract Management for Finance Teams

Topics: Finance Contract Software, Financial Contract Management Software

Written by Linu Mohan

Contract Management Software For Finance Teams

If you handle the finance department within an organization, or if you are part of a finance team, you might have been confronted with several of those questions. These are valuable thoughts that need to be handled speedily for the smooth running of the contractual processes. 

What is the role of the finance team in contract management? 

The answer is simple. Futile usage of contract management can tremendously affect the revenue of the organization. Improper management of contract dealings can lead to missed renewal, neglected obligations, failed opportunities. These affect the financial risk of an organization.  Financial risk triggers the active role of the finance and accounts teams to handle the entire contract process from the very beginning to the end to eliminate any slip-ups. Here are some features and benefits of a financial contract management software that can readily be backing for the finance team.

Role of the finance team in contract management

Automated Approval Reminders

An automated financial contract management software offers a highly beneficial add-on, automated contract approval reminders. These user-configurable auto-alerts activate action at key points in the contracting life cycle, permitting the finance team to efficiently plan contract renewals, reviews, or tenders. This can include keeping alerts for non-standard deductions, timelines for expenses/payments, or any other non-standard terms that are associated with finances. Such alerts can be sent before, on, or after the key points/dates in the contracting life cycle which helps to mitigate risks. Such approval alerts help the finance team to automatically send a notification to the right approval party in the right order when a contract is submitted for approval. 

Moreover, a flawless automated finance contract software allows to create automated approval trees which is a systematized tier of approvals. Once, you submit a contract for approval, you will never miss an obligation, as an alert will be automatically sent from the finance contract software. No more manual intervention is required here as alerts give flexibility to the finance team to not miss any renewals, automatic rollovers, or revenue opportunities at the system-level.

Keeping an Accurate Record for Audit Purposes

Ensuring accounting compliance by tracking key dates is required for keeping an accurate record for audit purposes. This makes the entire contract auditing process easy for the finance team. Moreover, a cloud-based central repository can store all the relevant contracts and tracks associated contract tasks. Contracts can be created and saved using template libraries and preapproved clauses in contract software. This ensures overall compliance and standardization of contract documents and agreements. Even a single edit is being traced and recorded, making tracking the entire contract process easy.

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All this makes the contract data to be securely accessible, available, and auditable by team members. Missing a single key date will indirectly disrupt the contracting process, affecting the processing invoices, budget preparation, receipt management and finally reconciling monthly and yearly transactions. Therefore, maintaining everything within a finance contract software makes tasks much less effort for the finance team and helps to avoid cost overruns.

Tracking High-Revenue Transactions

High-revenue contracts or deals involved in a contract life cycle must be tracked by each authorized user and member of a team especially the finance team. A qualified financial contract management software can offer such various features to easily track and find high-revenue dealings and transactions. It is a matter of high concern to keep alerts and notices for high-revenue transactions and important due dates so as to avoid compliance issues.

Specific team members or authorized users can be allotted to several contract groups formed based on revenue accounts, high-value contracts, etc. These team members can examine the smooth processing of those specified tasks to mitigate the impending risks. Moreover, finance contract software can also help to bring high-value customers to the top priority list, set alerts for contract expiration, and easy renewal of high-revenue contract deals.

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Keeping a Check on Vendor Costs and Expenses

Meeting financial obligations with vendors is a matter of high-concern especially for the finance team as they deal with the overall financial outflow of the organization. The finance team plays a decisive role in building and upholding the relationship between the organization and the vendors. Because a finance team can readily lessen the business expenses and guarantee compliance with business procuring limitations. Moreover, finance contract software helps the finance team to save money in late fees or omitted discounts.

Assure Payment from Customers and Track Slow-Pay/No-Pay Clients

A financial contract management software can automate accounts receivable to ensure that the customers are making payments on time under the agreements made on the contract with the organization. This aids the finance team to find any errors which impact the relationship between the customer and the company. The finance team is also entrusted to measure easy cash flow to integrate their accounts receivable with contract data. This helps them to find any clients who don’t pay on time. If some of the clients fail to pay the amount on time or don’t pay at all then a finance contract software automatically stops the services to those specified clients. This again makes the finance team run the entire process in accordance with the smooth flowing of the finance and contract agreements.

Takeaway

A perfect financial contract management software benefits the finance departments by mitigating the financial risks and thereby ensuring compliance. Implementing a contract solution is effective for an organization which can reveal revenue opportunities and decrease the costs affecting the contract process. Get to know more about how a finance contract software can benefit your finance team by booking a free demo here.

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