Why You Need Enterprise Contract Management

For most organizations, contracts aren’t an issue until something goes wrong. In the past, contracts sat dormant, stored in filing cabinets or as a bundle of PDFs on a hard drive, ticking time bombs capable of exploding into a mess of disputes, delays or — worst of all — litigation.

This lack of oversight and transparency in traditional contract management is rife with risk, including unexpected financial penalties like late fees, fines, payments for dormant services, missed opportunities, and compliance blind spots.

The new generation of contract lifecycle management (CLM) software is changing this by consolidating and streamlining contract management, even extending access and control beyond Legal to the entire organization, from Sales and Marketing to HR and Procurement.

Enterprise contract management makes sense for organizations already utilizing a basic CLM solution for some of their contract management processes but who need a more robust and comprehensive solution.

For example, enterprise contract management creates a centralized contract management hub that allows for access, collaboration, and oversight throughout an organization. This means all decision-makers, stakeholders and managers can track, review, edit and manage contracts throughout their lifecycle.

When contract management is done piecemeal, inefficiency and poor communication result. Organizations that silo their contact management face bottlenecks that delay workflows and dampen collaboration and productivity.

Contracts may originate in one department but require input from another before being finalized. Without stakeholder access to the contract lifecycle, the contract may be delayed or omit key provisions that open the company to risk and liabilities.

Size: Do you have multiple departments with clearly delineated roles and specific responsibilities? It’s not just how many employees you have, but whether you have numerous decision-makers who have a stake in contract creation, approval and management.

Inclusive enterprise contract management is ideal for organizations that routinely require rounds of stakeholder review and contract sign-off. From advanced search capabilities to a centralized, easily-accessible contract hub, enterprise contract management lets companies work collaboratively, flagging contract terms, obligations and potentially risky clauses.

Compliance: Your organization may be beholden to critical state or federal laws and regulations. Companies in highly regulated industries — like healthcare or finance — must adhere to strict guidelines and rules. Fall short of those standards and the cost can be astronomical, not only fines and financial penalties but litigation and other legal liabilities. With enterprise contract management, organizations can adopt a proactive risk management strategy.

Enterprise management provides tools, like audit reminders, milestone alerts and other automation that keep stakeholders in the loop on a contract’s status and requirements. Additionally, companies can create a compliance process template with instructions and additional documentation within the contract hub so that all critical compliance information is centralized and easily accessible by users.

Security: Are your contracts safe? With sensitive data and other critical information, contracts are a target for hackers. Tied closely to compliance, data security includes ensuring that all relevant protective guidelines, rules and laws are adhered to concerning sensitive medical, financial and legal documents. Unsecured storage systems  expose your organization to data breaches, ransomware attacks and other infiltrations that can be financially and legally devastating.

Relationships: Does your business depend on vendors, property managers, financial advisors and other third parties? Those relationships are often controlled and managed via procurement contracts and other agreements. Procurement contracts establish a legally binding relationship between buyers and sellers that protects both parties throughout the procurement process.

Without comprehensive management of procurement contracts and other binding agreements, companies can miss deadlines and opportunities. Many organizations end up paying late fees or paying for an outdated or unneeded service or product. Enterprise software management tools enable more effective record keeping and milestone tracking so that a company has complete knowledge of what is being paid to whom and when.

With enterprise contact management software, contracts are centralized in one contract hub for contract storage, creating a single source of truth for businesses. Using a centralized contract storage system lets organizations level up their contract management so that documents are easily accessible and searchable.

Enterprise software management solutions also improve negotiations and collaborations across teams and departments. Additionally, automated systems allow companies to swap out inefficient, time-consuming manual controls for streamlined processes and better workflows.

Enterprise contract management also delivers these benefits:

• Faster approval: Automated and customizable workflows expedite the contract review process, leading to a dynamic and efficient contract management system.
• Improved visibility: A centralized, digital contract repository allows better compliance, robust reporting, standardization across teams, and better communication between departments and users.
• Better auditing: A centralized contract hub allows document tracking and review of  contracts’ entire history, providing better internal compliance and a more accurate audit trail for each contract.
• Milestone alerts: Contract renewals, deadlines and other important milestones can be flagged with automated alerts so that important dates are never missed.

Business contracts are living, breathing documents with a range of potential issues, risks and upcoming obligations containing a multitude of potentialities within their language. While the initial negotiation of a contract can kick up a frenzy of activity and oversight, management, tracking and reporting are still needed even after the contract is signed.  Many contracts include additional milestones, checkpoints and review requirements throughout their lifecycle.

Bottom line? Organizations need an accessible, collaborative, single source of contracting truth in place that permits ongoing management as well as automation related to milestones, key deadlines and other actions related to contracts. Making the switch to an enterprise contract management solution can address all these concerns and help an organization get a handle on its contracting today and tomorrow.