Contract management is an everyday activity within companies, whether to deal with suppliers, fulfill obligations to customers, or even organize employees’ work. All businesses depend on these agreements to structure and protect various aspects of their operations.
However, even today the management of these important assets does not receive the necessary attention and few companies invest in optimizing the stages of this document’s lifecycle.
In general, they end up opting for outdated manual methods or even for the use of generalist software. They need to realize, however, that this approach generates considerable costs that could be avoided.
But why focus on contract management?
At the outset, it is important to understand that contract management is the process of mapping and monitoring all of the company's agreements, with the aim of ensuring compliance with clauses, deadlines and conditions of the document. In the end, it is a way of ensuring that the intentions of the parties at the time of negotiation are satisfied throughout the process.
However, due to the accelerated pace of routine, many professionals do not realize that they deal, on a daily basis, with:
- Endless documents, with dozens, if not hundreds of pages to read and review carefully;
- Unclear approval flows, in which it is not known the order of the steps or who is responsible for each activity;
- Hours and hours lost in front of the computer, performing manual and repetitive tasks, without time to demands that really require reflection and expertise;
- Lack of visibility on deadlines, changes, or renewals of contracts, generating the constant fear of missing important dates or of working on a old template;
- Huge use of paper, as documents are printed for revision and signature.
So, is there still room for improvement in contract management?
Managing these documents inefficiently is very costly for a business. World Commerce and Contracting (WCC) conducted an independent investigation and concluded that the suboptimal administration of these agreements generates a loss of up to 9.2% of the company's total revenue.
Here are some of the most common document management hassles that are likely costing your business a great deal and are undoubtedly hurting your employees' performance and productivity.
1. Wested time is wasted money
Employees waste precious hours on tasks that can be optimized. Some of them include:
- Difficulty locating contracts, which is even more serious when the issue the company seeks to resolve is urgent.
- Doubt if the version found is really the approved or the most recent one;
- Excessive use of time and attention to locating the necessary information. When you have a 70-page draft, this can become not only time-consuming but discouraging.
It is very hard to maintain a high degree of attention during all this time, so the risk of errors also increases.
2. High costs of storing and preserving files
If your company still deals with physical files, you are very familiar with the monthly costs of the huge storage structure and the specific demands to preserve the integrity of these documents. However, going digital without a centralized and automated contract registration structure can be just as costly.
Think of the hundreds, if not thousands of folders stored on your employees' personal computers, or the complete chaos of a shared cloud without any access control or standard for naming the documents.
3. Recruitment of professionals and security systems
The lack of a safe contract management system generates expenses in hiring suppliers to provide informational security. This means that the company does not have the necessary tools to carry out structured access controls, generating constant concern about the level of protection of confidential data or even about a possible hacker attack.
4. Missing important deadlines
When contract management is handled by MS Word, or other open text editing applications, it becomes much harder to locate and highlight important deadlines to follow. This leaves employees constantly worried about the increasingly concrete and probable risk of missing these dates.
Another point of attention is the automatic renewal clauses. A mistake on this particular issue can keep the company tied to an unfavorable contract longer than ideal. Undoubtedly, this situation generates completely unnecessary costs for the corporation.
5. Difficulty in locating information
When different departments manage the same contracts separately, communication problems or confusion often arise, such as:
- Lacking a unified storage location: Often, you don't even know where to start looking for documents or information needed;
- Decentralized communication: communication regarding the contract, both in the negotiation phase and in management, is disorganized and spread across several different platforms. Important information can be lost this way.
All these points create serious obstacles to the relationship between departments, reducing the motivation of employees in their work routine and harming the relationship with clients.
6. Lack of visibility on important information
When several departments and employees are involved in the contractual flow, it is essential to have reliable information available, extracted directly from documents and operations.
Otherwise, complications will start to arise, especially when collaborators need to consult the documents to manually extract data, for example.
7. Dissatisfied and unmotivated employees
All these inconveniences maintain a tense atmosphere in the work environment. The departments involved in contract management, such as the Legal or Sales team, are unable to focus on demands that require more attention because they are busy with a large number of repetitive activities.
When this frustration reaches very high levels, it is possible that employees seek opportunities in other organizations. This not only means the loss of talent for the company but also generates expenses with locating candidates for the vacancy, not to mention the training and onboarding of the new employee.
If you identify any of these inconveniences in your company's routine, it is certainly possible to save many of your current costs. You just have to improve contract management. The ultimate solution to this scenario is to use contract lifecycle management (CLM) software.
How to reduce costs using a contract management platform
Managing contracts well is no longer a differential for companies, but an essential requirement for success in the market. This happens for a simple reason: it is this management that allows the corporation to achieve greater control over its operations and more return on its investments, considerably reducing the risks of its activities.
See now 7 ways in which a contract lifecycle management platform helps you reduce your company's costs.
1. Optimize your time
Using a CLM platform, your company can optimize the entire document lifecycle. The main functionality that allows this is automation, which includes both the elaboration and the structuring of the steps necessary for the writing, approval, and management of each type of contract.
At the end of the day, your company reduces the time dedicated to these activities, leaving employees free to perform other tasks that generate more value for the company.
2. Reduce storage costs
With a CLM platform, you can store all your contracts neatly and automatically in the cloud. Say goodbye to physical files and all the expenses of microfilming and preservation. Technology makes this activity not only simpler but also much safer, saving money and reducing risks in your operations.
3. Reduce security costs
A contract management solution provides your company with strict access control to documents, structured from profiles corresponding to the authorization levels of your employees. It is also possible to engage external suppliers to negotiate any clause of the agreement, granting permissions within the necessary scope.
As a result, it will not be necessary to hire other services to ensure information security, reducing not only expenses but also managers' concerns.
4. Manage renewals
With automatic alerts and reminders, you'll never miss a contract expiration or renewal date again. In this way, you avoid accidentally renewing agreements that are unfavorable to your company. A CLM software allows you to set up this type of notice and select certain people in your organization to receive reminders of important dates and obligations.
5. Increase visibility
Greater visibility across the areas involved with the contract means better risk management, governance, collaboration, and communication.
Successful contract lifecycle management is able to efficiently track and monitor all important clauses. That way, you can make well-informed decisions in terms of contract termination, negotiation, and renewal. All of these factors lead to time and money savings.
6. Access data instantly
CLM software extracts data directly from your company's documents and operations. You can view this information in an intuitive, automatically updated dashboard. With this, you can monitor deadlines, status, and location of contracts, saving human and financial resources. Your documents will then be managed with a much more data-focused approach, in an agile and efficient way.
7. Make your employees more satisfied
With the automation offered by a CLM solution, wasted time will be a thing of the past.
All departments involved in the document’s lifecycle s will have complete autonomy to work based on the automated drafts prepared by the Legal Department. Once this template is established, whose content is maintained by the platform, lawyers will be able to focus on legal and strategic demands, and employees from other areas will work more independently, without losing legal certainty.
Learn more about the functionalities of a CLM software in: CLM: what is it and how can technology benefit your company
Improve your contract management with netLex CLM
An efficient contract lifecycle management process can reduce your operations costs in many ways and improve the contracting experience for everyone involved.
That's why, as contract volume increases and your business evolves, you need to rely on CLM software.
In the case of netLex, the tool offers an intuitive and easy-to-use approach, allowing the automation of documents within MS Word itself, in a simple and efficient way. In addition, it is also possible, through intelligent questionnaires, to guarantee more autonomy and security for all departments in your company.
Want to know more, chat with us! We'd love to help you with a free demo of our platform.