What Are Contract Management Best Practices?
Looking for Contract Management Best Practices?
Let’s face it.
No matter what your industry, agreements are the energy source that power business.
Agreements govern all facets of a business. Everything from employees coming to work and performing their job to suppliers agreeing to deliver goods and services on a certain date for an agreed upon price.
Of course, is why so many businesses choose to use written contracts to keep track of and enforce these agreements.
But what good are written contracts if you can’t easily keep track of and manage them efficiently?
Shockingly, it’s estimated that today 85% of businesses still manage their contracts manually.
This Means they keep all their vital contracts only in file cabinets.
Not only does this skyrocket overhead, it often results in missed deadlines and opportunities for profit through more favorable renewal terms.
According to Industry Week, companies lose 3 to 5% of savings opportunities because of auto-renting evergreen contracts.
Some of the biggest costs of managing contract manually are:
1) Rising Administrative costs.
• Manual contractual tasks take longer to perform.
• Important documents get missed placed or even lost.
• Contractual processes are not streamlined or efficient and can result in a sharp increase in man-hours.
2) Missed opportunities and savings.
• Because of the sheer workload of manual management, many purchases happen outside of contractual agreements.
• This drastically reduces your awareness and control over company spending.
3) Control & visibility
• Contracts are not within reach. This makes it difficult to measure and improve processes which can lead to a further loss of control.
However, here’s some great news.
With the use of a contract management best practices and a contract management software solution, contract approval time drops an average of 82%! (Source: Aberdeen)
Processes become streamlined and automated. This increases your control over spending and reduces your overhead.
So what are contract management best practices?
Streamline, standardize and automate are the themes in contract management’s best practices. Here are the vital components.
1. Have a central repository for all contracts.
• Manages the full lifecycle of a contract.
• One click access to all of your contracts.
• Gives you greater control over your spending.
2. Install alerts and reminders
• Eliminates unfavorable auto renewals.
• Gives you time to renegotiate or cancel the contract.
• Reduce risk by ensuring compliance.
3. Standardize Processes.
• Shortens workflows.
• Increases your procurement team efficiency.
• Saves time and money.
4. Have a proactive approach to managing contracts.
Want to get started putting all of these best practices to work in your business? Try out our Contract Assistant Software and get on top of your contracts. Click here to learn more.