For many who use contract management software, the benefits become quickly apparent. For those who don’t, however, it may be a little more difficult to picture. After all, “contract management” sounds like a way to file and store contracts rather than actively manage them.
Here are three proactive ways of using contract management software that underscore just how useful and even profitable contact management software can be:
Consolidate Duplicative Services
It’s not rare for a company to implement a contract management software system and then discover they are paying several vendors for the same or similar service. To stop that bleed of financial resources, look for an overlap of contracts you can consolidate.
A best practice to identify these opportunities is to categorize and tag contracts with customizable user-defined fields. Then, search and report on a specific category and begin to assess any patterns or trends of unnecessary coverage, overpayment, etc.
Example: Maybe you opted to purchase extended warranty coverage for new computer equipment your organization purchased earlier in the year. However, the contract you signed with an external IT services provider already encompasses ongoing service and support of the same equipment. Which contract offers more services for a lower cost?
Renegotiate Current Contracts & Agreements
If you’ve input critical dates into your system, a quick search will bring up the list of current contracts that need to be renewed—and therefore renegotiated—in the coming period. And if you are diligent in keeping track of related notes or events pertaining to each contract, you’ll benefit by building your case over time and reduce any last-minute scrambling for supporting information.
Perhaps you can reduce your cash outlay by negotiating a reduced subscription pricing plan or monthly fee schedule. Or, even maintain the current pricing structure, but enhance the arrangement by picking up an added service or benefit at no additional cost.
Example: Think about your personal car insurance rates. At times of policy renewal, many insurance companies are open to renegotiating rates with profitable, long-time customers, especially when presented with quotes from competitor insurers! And if a price reduction isn’t feasible, maybe the addition of complimentary roadside assistance will suffice.
Dates to Beware
And while on the topic of highlighting critical dates in your system, pay extra attention to note any re-enroll or renewal dates that automatically take effect. You want to maintain the flexibility to proactively decide whether to continue your contractual obligations or avoid being trapped with a vendor you no longer want to engage with.
Your contract management system should support reminder alerts to keep you informed of these and other important dates that can have far-reaching implications for your business. Just one miss of a brief period to opt out of an automatic contract renewal can be frustratingly expensive over months or even years.
Example: Mobile phone service providers are notorious for exploiting this tactic. Surely you know someone who didn’t take action after waiting months or more for their service contract to expire, only to be looped back in for another two years. Ask them about the personal ramifications of that mistake and then amplify it to a magnitude relative to the scale of your business. Ouch.