In this case, the “A” stands for audit. Every company conducts an audit of its accounts at some point. Either accountants review contract activity to properly assess value for tax purposes, or a special review is conducted to answer a specific question coming from a business unit, manager or consultant.
Either way, if you run a department or even work in one that hasn’t organized its contracts, you can rely on an extra workload during an audit. Often there is a deadline to beat as well (fiscal and tax year-ends), making the situation all the more difficult.
Now, to be clear, contract management solutions are not accounting tools. However, an electronic record of a contract, filled in with complete and up-to-date information, should be the final word on what a company owes or is owed from customers or vendors. Those conducting audits will ask for contract information as a guide to what was supposed to be billed or paid. A contract is often the only way accountants or auditors can value business partnership agreements as well.
Retrieve, search functions make life easier
A contract management solution such as Contract Assistant makes access and retrieval of this kind of information extremely easy. Electronic records created in Contact Assistant include fields for financial summaries (in any version, Standard, Pro, Enterprise).
Thanks to multiple search filters, retrieving information from a Contract Assistant contract record can be a straightforward process. Compare the difference between calling up key contract financials in a few mouse clicks with a “manual process” of digging up contract records that may not even be stored electronically.
Indeed, with a contract management solution, you or your department may be the ones providing answers that help auditors of company accounts, and that can go a long way to helping the company’s bottom line.
Helping cut or recover costs
As we’ve noted earlier in this blog, cost savings can be found when companies review contracts for actual terms of unit cost compared to those cost found on paid invoices.
Without a written (and easily searched and retrievable) record of what you or your company has agreed to pay for a product or service, it’s easy for the “left hand not knowing what the right hand is doing” scenario to develop. This means it’s possible for an accounts payable department to pay invoice from a vendor – but without attention to different or higher unit cost.
This is often not a nefarious or devious trick by the vendor; it can be a simple error or it reflects a change the vendor thought they could bill for. The question is – does your contract allow for this?
At the very least, a contract management solution can provide those auditing company accounts with a definitive list of vendors or customers/clients. This can help straighten out matters when bills or invoices go missing in other departments.
In the end, whether you work for or are responsible for a business unit and its contracts, you don’t have to sweat questions coming from accountants or internal account auditors if your contract management solution is in place and up to date. That alone may be worth the cost of any contract management solution.