Disorganization in an organization can likely result in money left on the negotiating table, wasted resources and unsatisfactory product delivery. Companies often experience hidden costs, such as lost credibility, which affects future contract negotiations, or difficulty selling management on new projects due to previous project failure.
Contract Lifecycle Management (CLM) can correct inefficient processes, leading to greater growth and stability, long-term viability and immediate improvements to the bottom line.
Seven Reasons Most Businesses Need Contract Lifecycle Management
- Assessing and mitigating internal and external risks
Pre-emptive alerts to important milestones, such as renewals, amendments and compliance obligations, can prevent overlooking required actions. Organizations should have a handle on all contract expirations, action and renewal dates.
- Complying with statutory and reporting requirements
When required reporting is not performed, the consequences can be felt by many divisions of the company. Make sure your organization can properly record evidence of compliance where legal requirements exist.
- Establishing a centralized repository
A primary objective of CLM is that all contract data and documents exist in one central repository to enhance visibility. This can help your organization quickly locate a specific contract or a term within a contract.
- Handling complexities such as rule-based pricing and rebate management
Your organization should be electronically capturing and tracking rebates, discounts and incentives to ensure all are honored. Pricing rules should be easily implemented and enforced.
- Standardizing, automating and reducing cycle time
Keep track of the organization’s typical contract cycle time. Make sure each step’s time can be tracked and pinpointed.
- Streamlining the procurement and sales process
Compare and analyze metrics to identify high performers and best practices. Standardize sales terms (discounts, rebates) for ease-of-use.
- Enhancing supplier relationship management (SRM) and customer relationship management (CRM)
Make sure your organization is considered to be valuable, reliable and credible by customers and suppliers.
CLM Equals Measureable Results
Contract managers typically rate most aspects of their jobs as “challenging.” CLM can make most tasks streamlined, making processes more efficient and productive.
Additionally, contract lifecycle management results in reduced liability, increased cost savings and quality of delivery, and enhanced relationships with suppliers and customers.
The results are real, measurable and sustainable. As the cost of contract management continues to climb, as do demands for accountability, proper governance and transparency, it’s clear that CLM is becoming a must-do project.