This famous quote from a Jedi master (and real-life actor Frank Oz) applies to so many things in life. And of course, it applies to contract management too.
The immediate benefit of implementing a contract management solution can be realized in the simple act of converting all your scattered electronic (and physical) files into one database.
It is not the creation of the database that is so beneficial (though it is); it’s what you’ll learn while doing the inputting process. You will literally learn by doing.
Here are five ways the contract management process will immediately benefit your company, branch, or department.
1.) Know how many contracts you really have.
This may sound obvious, but until you actually gather up all the documentation on contracts, you might not know how many your company really has – and how many it should be actively managing.
2.) By filling in the Financial Summary information (a Contract Assistant feature) you’ll quickly get a picture of all financial obligations and inbound payments.
Every department of a company should have an idea of what funds are going out and coming in. Even if it’s not a formal balance sheet drawn up by accounting or accounts payable, a handy financial summary of all contract obligations can help with internal decision-making. You can have all that information within minutes of competing your database when you fill in financial summary fields.
3.) Spot errors in document/contract confusion.
When you start converting documents into electronic files, you’ll find it easy to scan key information. You may catch key discrepancies between what’s been agreed to – and what’s actually in a contract. These are most likely innocent mistakes, but catching them early can impact your department or company’s bottom line.
4.) Quickly find expiration dates – for better or worse.
For each electronic record of a contract, you’ll want to record expiration dates. That can be an eye opener if you’re dealing with contracts that haven’t been managed. You may even find expired contracts that are still being paid (and here’s a great example of that) or ones that are close to auto-renewal dates or other key dates. The point is, you’re going to get a fast picture of what’s a priority for management and what’s not.
5.) Know who key players and stakeholders are.
This is especially important in large enterprises where many departments handle many contracts. Too often, information gets “locked down” to a department, so when another department needs to reach out to a certain client or vendor, there’s a key knowledge gap. You can easily end up with two different departments contracting on different terms to the same vendor. Or you may simply lose time in tracking down who-knows-what about certain vendor agreements or client contracts.
Either way, when you start the process of inputting documents into the document management database, you’ll quickly identify who are key contacts. Identifying that information in key fields or even just in notations will ensure this information no longer gets “locked down. “
As you move beyond the inputting/database creation phase, you’ll have time to plan for deeper reviews of contracts so that your organization can move from simple storage of information to actively managing it. Don’t pass up the chance to take advantage of what you learn from the start of the process.