What are the key benefits that you can enjoy when using a contract management software?
Contract management software vendors tout so many great things about their software product, but what are the real-life and practical benefits of a contract management software.
We will go over 15 key benefits that you can expect from a contract management software so you can get a real and unbiased view of the real and practical benefits of a contract management software. We will see how a contract management software can help you achieve operational efficiencies and increase your overall productivity and, ultimately, your profitability.
In this article, we have hand-picked our selection of the key benefits. You can navigate to the right section using the table below:
- Optimization of administrative tasks
- Increase your overall profitability
- Standardized intake system
- Risk mitigation
- Contract version control
- Audit logs
- Improved collaboration
- Searchable contracts
- Access from anywhere
- Central repository
- Backup protections
- Contract clause library
- Business intelligence
- Manage the contract’s lifecycle
- Contract management software key benefits takeaway
Let’s get started.
1- Optimization of administrative tasks
Optimizing your administrative tasks and contracting process should be on top of your priorities especially when:
- You have an important volume of contracts to deal with
- Deal with complex contracts in your business
- Deal with a lot of internal processes and red tape
- Have long and extensive contract negotiation cycles and sale cycles
The list can go on and on…
The International Association for Contract & Commercial Management (IACCM) indicates that companies lose more than 9% of their annual revenues in inefficient contract management processes.
In practical terms, you are likely burning 9% of your annual at this very moment for inefficient contracting processes.
You can look to a contract management software to eliminate the administrative tasks, complicated workflows and manual labour. Who can complain about that?
By shortening your contract negotiation cycles, close your deals faster and increase your overall revenues.
Having a contract management software gives your teams the benefit to focus on what really matters for the business as opposed without getting bogged down by frustrating and endless administration tasks.
2- Increase your overall profitability
A contract management software will increase your overall productivity and therefore your company profitability.
You can achieve more profitability through cost reduction and time savings directed to driving more business.
According to Goldman Sachs, companies making use of contract management software can reduce their annual contract management costs by 20% to 50%.
Frankly, with this magnitude of cost savings, we are not sure why not all businesses are modernizing their contract management process.
You will benefit in leveraging a contract management software so you can focus on driving more business, closing deals and penetrating new markets.
You should not lose precious time on dealing with manual tasks and dealing with multiple email threads and tedious processes.
Aberdeen Group’s report titled “Best-in-Class Performance in Contract Management, states that the best managed companies will spend 19% fewer days in their contractual negotiation cycle starting from creating all the way to approval.
By cutting down your contract drafting cycle by nearly one fifth, your business will achieve a greater level of agility in churning its contracts, closing deals, negotiating and so on.
It may be worth it for you to evaluate the potential of leveraging a contract management software and assess how it can help your company reduce costs and increase overall profitability.
3- Standardized intake system
The intake process is the point of entry for triggering the commencement of a contract creation and drafting thereby kick starting the contracting cycle.
Standardizing this process will help your contract administrators efficiently draw up the contract based on the business needs and commercial terms.
Through a standard process, your business units will consistently provide you with the level and extent of information you need, in a standard format, allowing you to successfully start the contracting process.
For many businesses, this process is manual and quite painful.
For instance, the sales team will ask the legal department to draft a contract without sharing all the necessary information to enable them to do their job. This will force the legal department or contract manager to email the sales team for further details and clarification.
In the end, you may end up losing hours, if not days, in email exchanges and finally end up with multiple email threads where you will need to fish the relevant information.
This process must be automated and standardized!
A contract management software offers you the benefit of centralizing your intake process helping you accelerate the contract drafting turnaround time.
4- Risk mitigation
Risk mitigation is a major advantage in using a contract management software f.
Each organization can find benefits in their own way but will surely find real and practical benefits.
We will share with you a couple of ways that you can reduce risk to your business.
Benefits of setting alert notifications.
You can program your contract management software to issue alert notifications so you can stay on top of your contractual obligations, milestones and deadlines.
For instance, by setting a notification to be sent to you prior to the expiration of a contract, you can ensure that your contract does not expire with the passing of time.
An expired contract can mean loss of contractual protections and possible loss of revenues.
That’s bad for business if you lose revenues or protections due to inefficient contractual processes.
You don’t need to put yourself in that position!
Benefits of managing our contract template inventory.
Your contract software can provide you greater control over the management of your contract template inventory.
You can readily update your templates and make sure your internal stakeholders use the latest contract version.
Many companies signal their contract template management to be a pain point. The contract templates are updated manually, not shared with the right stakeholders at the right time and wrong expectations are set with clients or vendors.
Through the contract management software solution, you have the benefit of managing your contract template portfolio. When you make an update to your contract, the update will be pushed to your internal business stakeholders in real-time.
5- Contract version control
When you are dealing with multiple contracts, complex negotiations, multiple parties and several internal stakeholders involved, you have the recipe for a painful contracting process if your operation is not automated.
Dealing with a few contracts here and there can be easy to manage, no big deal. You don’t need to worry as much about version control.
However, most organizations will need to keep track of their contract versions so as to minimize errors and ensure that the proper contract draft is shared with the external parties.
A notable benefit of a good contract management software is the ability to track and manage your contract versions in the context of contractual negotiations.
This can save you costly mistakes. Even worse, signing the wrong contract version! Let’s hope that never happens…
You will eliminate having scattered contract versions, contractual edit proposals that do not end up getting reflected in your contract, incorporating an incorrect clause or modification in your latest contractual version, not knowing who had visibility to the contract and so on.
With proper version control through automation with the right software, you will accelerate your contracting cycle, increase the accuracy and quality of your work and ensure all your contract versions are tracked in a central repository.
6- Audit logs
As part of your compliance processes, quality assurance, security and access management, a contract management software will provide you with the added benefit of obtaining audit logs.
Your contract software should provide you detailed logs about who approved the contract, who accessed the central repository, what version was modified when and so on.
Otherwise, with manual processes, you will have no way to easily trace your contract activities to extract meaningful information about your contracting history, who was involved, when and how.
7- Improved collaboration
Your contract management software will provide you with capabilities to share your contract draft with others to get their feedback or to give them visibility.
In a contract negotiation phase, you will typically have to share your contract with several stakeholders such as your finance team, sales team, legal operations team or different contract administrators.
Benefits and flexibility to assign your contracts for processing.
The contract assignment feature is quite important. This is an area where automation will help you save time and reduce many back and forth exchanges by email or through other channels. Good to get rid of clutter…
Benefits to manage your approvals and track them.
Approval management is crucial to succeed with your contract management process. After all, this may be the reason why many of you are considering the adoption of a new software product.
Benefits of handling parallel processes.
Parallel process management will save you a lot of time. Whenever you can do parallel activities, that’s always the best thing to do.
Benefits by optimizing your interdepartmental workflows.
By having the same software solution handle your interdepartmental workflow, you can effectively manage the workflows within the same system therefore expediting the entire process and being able to monitor progress.
8- Searchable contracts
Increase contract content visibility within your organization with search capabilities and search benefits offered by a contract management software.
This way, you can keep your content readily accessible whenever you need it.
According to Aberdeen Group’s report titled “Best-in-Class Performance in Contract Management, the best managed companies have more than 75% of entire and global contracts in a searchable repository where the other organizations have approximately 33%.
Through the search capability, you could retrieve your signed contracts, access images, documents and metadata.
This will accelerate the speed at which you will make business decisions and allow the legal department to expedite their turnaround time when a legal opinion is needed or internal stakeholders need support on an existing contract.
9- Access from anywhere
A contract management software deployed in the cloud will allow you to access your contracts from anywhere through the internet and a secure connection.
Productivity will be increased as users can take actions on a contract to help the contract process move forward.
Based on the user-level permissions, you can manage the level of access a user will have to the system so you ensure the right people have access to the right document.
A role-based access will offer you benefits that you could not achieve as well through other means.
If your contract management software is optimized for mobile devices, you can also have users access the system through their mobile device.
10- Central repository
A central repository will help drive quality, improves data integrity, helps organizations make better business decisions, offers historical data and will ultimately help increase your return on investment.
According to Goldman Sachs, companies on average will spend 5% of their revenues to look for, track and find the contracts they have already signed.
With a central repository of your contracts, you will have one source of truth. Your contracts are consolidated in one central location avoiding duplication, errors and confusion. No more looking for the contract in scattered places.
Your contract information will consistently remain up-to-date allowing your business stakeholders to get the same information at the same time.
The central repository will also enable you to transition from paper-based processes to a fully digitized contracting process.
You will need to be fully digitized on the long-run!
11- Backup protections
In the good old days, we used to stress about losing our only originally signed version of our contract! Remember that…
We used to make so many copies just to make sure that we did not lose anything.
Today, the stress about backup copies have creeped into the digital world. What if your network drive crashes? What if your central repository gets corrupted? What if something goes wrong and you lose your electronic contracts? Scary stuff…
This sounds scary but no need to worry with today’s backup protections offered by enterprise-grade software solutions.
In essence, a cloud-based contract management software should provide built-in mechanisms to protect the data stored in your central repository.
If you are deploying a solution on-premise, then you will have the ability to implement the backup processes that your organization is comfortable with.
12- Contract clause library
Are your contracts compliant with your company processes and legal obligations?
According to Aberdeen Group’s report titled “Best-in-Class Performance in Contract Management, on average, most companies say that they consider only 30% of their purchasing transactions to be compliant!
Based on the same report, the best managed companies have a compliance ratio of 85%.
The compliance controls and effectiveness of your contracting will directly impact your organizational success with respect to compliance to your policies and the applicable laws.
By baking pre-vetted fall-back clauses or alternative clause library into your software solution, you can limit and mitigate risk to your business.
By keeping your contractual clauses as close as possible to your policies and processes, you will ensure that you remain compliant with the laws and regulations applicable to your business and ensure that your company will be able to deliver on the obligations it signs on.
Balance between compliance and sales activities
13- Business intelligence
In the modern ear, data is coined to be the new black gold!
Having access to your contract data will allow you to implement strategies and technologies allowing you to make quick and informed business decisions.
When you leverage a software solution where you centralize all your contract data, you can then analyze historical information, current state of affairs, make predictions for the future or make decisions about the future.
You can identify areas of improvement, detect bottlenecks and tweak your operations to enhance and further optimize your contracting cycle.
Scalability is a truly attractive feature of a contract management software.
Successfully managing your contracts is fantastic.
The real question is, are you able to continue growing without hitting a bottleneck or dealing with an operational breakdown? Will your current process withstand the growing pressures of your business.
A contract management software will automate your contracting tasks and activities so you can more easily scale your operations without seeing your process crumble and break down.
Being able to scale your operations with minimal effort or additional investment is an awesome benefit to tap into with a contract management software.
15- Manage the contract’s lifecycle
A notable benefit of a contract management software is to manage the contract’s lifecycle.
Winning a deal is great but managing your contractual obligations is crucial.
A contract management software will come with contract lifecycle management features allowing you to track, monitor and take action on your contractual rights and obligations.
With a contract management software, you can track your contractual rights and obligations, trigger the right tasks and activities at the right time, handle your renewals properly and ensure you remain on top of your obligations.
Managing your ongoing obligations is an essential component for the success of your organization, this can be done efficiently with a software solution.
This is important in the life of a growing business as you can focus your time and energy on closing deals rather than internally feeling strained and stressed.
After you sign the contract, your contract should not be filed and forgotten.
You will need to share it with the right teams, ensure that relevant business units understand their obligations and on-board the client, you should be able to track events and milestones in the advancement of the contractual obligations and ensure that you manage any contractual amendments and modifications.
16- Contract management software key benefits takeaway
Leveraging a contract management software can be a good business decision if you are dealing with multiple contracts, complex negotiations, multiple parties, many internal stakeholders involved, rigorous approval process and large scale operations.
Through the powerful benefits of automating your contracting tasks, centralizing your contract repository and driving data and analytics to make more informed and sound decisions going forward, you can position yourself to close your deals faster and while reducing your costs.
From our perspective, your organization should consider the benefits outlined in this article and assess if the adoption of a contract management software can alleviate your contracting process pain points and help improve the way you do business.
Are there other benefits that you consider important? We would love to hear from you. Drop us a comment.
In the meantime, best of luck!