3 Reasons Why You Need a Contract Management System
In the current business world, contracts are the basic language of business transactions. Nearly every dollar earned or paid by businesses is preceded by a contract. Contracts power business growth by helping companies manufacture goods, provide services, build a franchise, and more.
Despite such crucial importance, most businesses manage their contracts haphazardly. Businesses should take advantage of contract management systems, such as SpotDraft, to enjoy several benefits, including simplified negotiations, better visibility, improved relationships, and accountability. Businesses need a contract management system for the following reasons:
Simplified negotiation process
A reliable contract management system ensures that teams from different parties work towards achieving the same goal. Negotiating a business deal is complicated, and the back and forth emails make the process even more difficult. Your sales team might be caught up negotiating a discount only to realize that the deal adds more pressure to the production team or the deal requires a thorough compliance check, but your legal team is overloaded to verify it until a later date.
With a contract management system, all teams are informed when and where to intervene in the contract lifecycle. This significantly minimizes the time spent negotiating contracts and improves operational efficiency, allowing businesses to generate more revenue.
Contract management is increasingly becoming complicated, especially for businesses that work across borders. Engaging in business transactions with suppliers or customers in different regions has several compliance requirements. For instance, you might be required to highlight contract values in annual reports or notify regulators of money transfers to businesses within specific jurisdictions.
Contract management systems also provide a full audit trail, which eliminates compliance management risk. Instead of searching through your email negotiations for missing attachments or approval letters, the system does everything for you. Since everything is automated, you can easily access digital records. You can also generate a detailed audit report with a few clicks.
You also benefit from contract compliance. The contract management system can run analytics that monitor the health of various established business relationships. These relationships include how your suppliers comply with regulatory compliance and adherence to various service level agreements.
Negotiate renewals in less time
Interestingly, most businesses forget to apply for contract renewals in time, leading to missed business opportunities. However, a contract management system recognizes and alerts you when the contract is due for renewal. It reminds businesses and legal teams when contracts will terminate and are due for renewal.
The software also keeps track of specific terms and obligations of future contracts with the same partners. If you have a contract with particular suppliers, you can easily negotiate for renewals. Analytics drawn from the existing contract helps parties analyze their performance and formulate predictive KPIs to measure their next phase of business transactions.
Contract management might prove challenging for most businesses and organizations. Fortunately, contract management systems provide great insights into specific contract details, facilitate collaboration, and reduce negotiation time and compliance risks. A reliable system ensures that businesses don’t miss deadlines, payments, or business opportunities.