Tripped up by the fine print: cost reduction and contract management
By: Judy Tucker, business consultant, Blueridge Software, Inc.
With 75 percent or more of business relationships today governed by contracts, booby traps hidden in the fine print can threaten the health of your organization. Overlooking an automatic renewal date, for example, can multiply your costs, sometimes for years to come.
For example, one tech company discovered after signing a multi-year deal for telecom services that it’s existing contract still ran for another year. This was overlooked in the negotiating phase (and before they implemented contract management software, which could have alerted them to the end date). The overlap cost them ore than $100,000
Then there’s the case of the small city in the southwest that recovered $70,000 in overpayments for expired contracts in the first six months after implementing a contract management system. The city recovered an additional $200,000 in the next fiscal year.
At Blueridge Software, we’ve heard lots of stories like these over the years and all these underscore one very important point: Contract management can directly affect your bottom line.
And unlike many other business operations, contract management can be done fairly easily with consumer-level interfaces like those found in Contract Assistant. Lack of a timely review, a missed escalation clause, or failure to give required notice of a price increase simply because of an unnoticed deadline can have an immediate negative impact on your bottom line.
Let’s face it: doing the deal gets a lot more attention than managing the signed agreement. Once a contract is inked it all too often disappears into a filing cabinet, or onto a spreadsheet that can’t begin to do a decent job of tracking.
Contract management software makes this “hidden” information visible, customizable, and most important of all, usable to anyone viewing it for reporting purposes. That report and review process of existing contracts and end dates can easily become important cost-cutting information when budgets are reviewed.
The bottom line is that contract management is not just for “easing” the pain of contract management; it can be part of your company’s cost-cutting strategy as well.