Contract management services or Contract Lifecycle Management (CLM) is indispensable to running businesses. This is because almost every organization runs on various forms of contracts at different points in time for effectualness.
Contract management involves the processes and stages implemented in managing every contract with business partners, suppliers, customers, or vendors of a company or business organization from the initiation of the agreement to its renewal or termination.
The efficient running or management of contracts is highly crucial to the business or organization’s success. Now, what are the benefits that contract management services provide? Why should a business company or organization undertake proper contract management services? Let’s see some of these benefits.
Contract management services increase productivity.
With proper contract management, suppliers, vendors, employees, and other parties on the other end of the contract can be accountable for efficiency. Contract Management ensures that every department involved in the contract works diligently to the success of the purpose for which the agreement was established.
The monitoring and auditing stages of the contract lifecycle management determine if the terms of a contract are being met and well upheld and if the contract is worth renewing or meant to be terminated. This has a net effect in making the business more productive.
Risks are reduced to a bare minimum.
Another benefit of contract management services or a good clm platform is that the business risks are significantly mitigated. Contact sources that have high-risk levels can be identified and avoided. Also, there is the risk of purchases in contracts with a low turnover rate; these can also be minimized.
The contract compliance as well enjoys noticeable improvements with the correct contract management. Contract accountability reduces the risk of falling short of contract terms and thereby compromising service performance.
Contract management software services provide a platform for enhanced efficiency on production and company direction. With an organized workflow, you can keep tabs on how every contract progresses and how much input is being made into the company or business without getting it mixed up or confused.
The seamless document management provided by contract lifecycle management allows for faster and more accurate tasks completion. Therefore, giving you more control over the workflow in the business. This also helps to save precious time and resources.
It also reduces costs in the business.
Contract management saves a business the problem of exuberant and incessant costs arising from various crevices running the business – some of which are even hard to trace.
Every aspect is well accounted for in contract management, and departments that prove not worth the cost after contract auditing and accounting can be quickly dismissed or replaced.
Contract management software that is now popularly implemented in businesses also significantly mitigates costs in business operations.
Good business relationships can be established.
In the long run, businesses can identify which business partners are worth keeping relationships with by consistent contract managing. Some companies would have proven more beneficial to the contracting firm than others have, and some may have proven otherwise. In this way, the business board can identify which relationships to build on.
Contract management also helps in this case by providing a platform on which the relationship can be built. Previous or present existing contracts between both parties give common ground for some long-term partnership.
Contract management services make negotiations of contract renewals faster.
When accurate tracking and monitoring of contracts is done during the contract management lifecycle, the progress of contracts and their relevance to the business is realized.
Hence, at the end of the duration of the contract according to the set terms, it’s easy for the board to decide whether or not to renew the contract. If proper contract management services were not in place, this could be a significant bottleneck process.
Frequently Asked Questions
What is the contract life cycle all about?
Contract management is done in a series of stages. These stages follow one another and begin again after completion in a kind of cycle order, hence the name contract lifecycle.
Contract lifecycle management involves the processes involved in managing business contracts from the point of initiation or creation through the execution processes till the end of the agreement, which results in either termination or renewal.
The stages are;
- initiation of idea
- approval of the contract
- execution of the contract terms
- monitoring or tracking
- reporting or auditing
- evaluation or revision
- renewal or termination of the contract
Is the use of contract management software a better option than manual auditing?
Contract management software is the electronic mode of contract management processes, and it involves using special software that performs all the required tasks in contract management.
The use of contract management software is much more efficient, but it is also easier, faster, and less costly, thereby making it a better option.