Contracts form the foundations which B2B trading success is built on. So it goes without saying that robust contract management practices – including the implementation of appropriate systems for storing, sharing, consulting and updating contracts – must be a key priority for B2B businesses trading within large and complex supply chains.
Yet, despite this pressing need, a staggering number of companies still have no bespoke contract management system in place. That’s surprising, given the value that effective contract management can have on both sides of a business relationship.
However times are starting to change, organisations are waking up to the fact that they need to implement advanced contract management tools and technologies to keep track of their deals and streamline communications with trading partners.
Recent figures from the World Commerce & Contracting Association reveal that 84% of surveyed members are experiencing pressure to simplify contract management, while 65% are looking for a system to improve communication and 81% already have plans to implement contract automation. This is all down to the growing awareness of the strong business case for adopting gold standard, contract management software.
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But what exactly are those benefits? If you’re still unsure how a contract management system can enhance your business performance in tangible ways, this article is for you. Read on to discover the positive effects that implementing a contract management system can have on your operations.
Contract Management System – 3 Major Benefits
1) Single Source of Truth
For starters, a single database for all of your digital contracts allows you and your team to quickly and easily access the documents you need. This means that routine operations like checking up on previously agreed contract terms and reviewing expiration dates can be handled with a few clicks of the mouse.
At the same time, more sensitive projects such as preparing and presenting the relevant records for an external audit are made infinitely easier by having a contract management system in place.
This single source of truth also minimises the risk of contractual disputes. With figures published recently revealing that arbitration caseloads in the UK reached a four-year high in 2019, it’s important to protect yourself against the significant logistical, financial and bureaucratic headaches such disputes cause for your company. With everything in black and white, in a centralised location, that’s easily kept up to date and accessible by both parties, discrepancies are kept to a minimum.
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Finally, by relocating all of your contracts to one single location, you can also completely eliminate the logistical issues and inefficiencies associated with sprawling spreadsheets and elusive email correspondence.
By their very nature, these solutions exist in silos, making coordination across them difficult (if not impossible), while the scope for data to become lost, incorrectly amended or breached by an external attacker is far higher. Spreadsheets are notoriously error-prone, while another factor to consider is the controversy over whether emails always constitute a legally binding agreement.
Despite these significant drawbacks, both methods are still employed by a startling proportion of companies today. A comprehensive contract management solution sidesteps all of these issues, compiling all documents and agreements into one, easy-to-access information system.
2) Enhancing Contract Compliance
Another of the biggest benefits of employing contract management software is the ease with which you can monitor the contractual terms of individual agreements and ensure that they are being met by both parties. After the painstaking amount of effort which goes into hammering out the details of business deals, it would be a crying shame if one party was allowed to renege on their obligations due to substandard controls and monitoring practices.
Unfortunately, that kind of scenario is not uncommon. Further research from World Commerce & Contracting has concluded that poor contract management is responsible for a drop-off in 9% of companies’ annual revenue due to unfulfilled terms, missed deadlines, unclaimed monies from rebate programmes and general inefficiency.
The number of different deals being brokered by even a modest-sized organisation can run into the hundreds if not thousands. For that reason, the process of staying on top of the smaller print can quickly turn into a logistical nightmare, explaining the prevalence of such errors.
While those errors may be understandable, they are unforgivable for any business serious about squeezing the most value out of their transactions. Manual contract management is, without a doubt, time-consuming, cumbersome and prone to human error, especially when contracts are constantly being amended and updated.
With that in mind, digitising your operations and migrating all of your contracts to a dedicated contract management system is the ideal way to automate supervision and ensure compliance.
Not only can you ensure your own business lives up to its end of the bargain – thus avoiding those lengthy and expensive disputes we mentioned earlier – but you can also monitor whether the other party is delivering, as well.
This is because contract management software not only stores the nuts and bolts of an agreement after it is signed, but it can actually document negotiations as they take place. This gives you an airtight and legally binding document to which both parties can refer whenever they wish – tracking any changes and accessing the relevant information at the touch of a button.
With increased accountability and a system which automatically monitors whether the terms and conditions are being fulfilled, contract compliance is fully assured.
3) Optimising Operations
Finally, both of the above advantages are conducive to one ultimate goal – optimising your operations. With the ability to rapidly locate the documents you need and share them with the appropriate parties, as well as automatically update terms and set reminder alerts for upcoming expiry dates, you’ll cut down on the time spent on menial administrative tasks.
Given that time is money, this kind of automation and optimisation can save you significant sums. According to one recent study, over 40% of workers spend at least a quarter of their work week on repetitive tasks that could be easily automated. Eliminating these tasks and streamlining your business processes can slash operational costs significantly. The right kind of contract management system is a crucial piece of that puzzle.
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As well as increasing efficiency, the centralisation of your contract data also allows for operational analysis and actionable insights. For example, you can organise all of your business partners into separate categories, allowing you to see at a glance whether or not a surplus of different suppliers for similar products can be addressed to enhance savings. Similarly, an overview of the different deals you conduct with the same partner could give you a more favourable negotiating position when it comes to renewing your terms with them.
What all of this amounts to is streamlined operations, greater efficiency and reduced overheads – which equate to a more profitable business. That’s something everyone can get behind.
Using Rebate Management Software for Contract Management
The first step to taking advantage of these benefits is identifying a digital tool that’s fit for purpose. Fortunately, the rebate management software provided by e-bate goes above and beyond rebate optimisation, offering users a complete solution for all their contract management needs.
e-bate enables you to conduct and monitor every aspect of contract management on a single platform – from initial negotiations to agreement to compliance to renewal. This sophisticated piece of technology has been specifically engineered to help you stay abreast of the countless contracts your business is involved in.
As well as tracking and curating all of the small print contained within every contract you ever sign, the software is adept at handling the finer details which pertain to rebate arrangements.
The central repository is automatically updated in real-time as and when new sales and purchases are completed against existing contracts. Equipped with that data, the software also automatically calculates when volume thresholds are approaching and what rebates will be due as a result.
What’s more, all of that invaluable information is stored securely in a place where it can be accessed by either party throughout its duration, greatly facilitating lifecycle contract management.
Say goodbye to the messy inefficiency of spreadsheets and email correspondence by migrating to a dedicated contract management platform and reap the benefits from day one.
Want to learn more about how rebate management software can help you digitise and optimise contract management? Talk to our experts at e-bate today for more information or to request a demo of our leading-edge rebate management solution.