Commercial contracts, which fall under this umbrella, include sales invoices, utility contracts, purchase orders, and employment letters. If a major project is involved, or highly regulated or technical goods and services are required, contracts can be extremely complex. Nearly half of the enterprises surveyed in a recent study indicate that the driving force for improving their contract management is better risk assessment and mitigation. More than 60% of the enterprises using contract management have reported that it improves their ability to avoid risk.
Contract management software can be a great improvement in existing contract management methods. While the average Global 1000 corporation maintains over forty thousand active contracts, most of them are still manually managed. This can be inefficient and costly. Contract management software automates much of the contracting process, from the creation and negotiation of the contract to monitoring, ensuring compliance, and renewal of the contract.
These types of software solutions can maintain many corporate contracts simultaneously, allowing a company to have improved control over their contracts and greater access to them. Using contract management software, companies can realize better savings, improve effectiveness of sales, and increase overall compliance.
Despite the availability of contract management software, most organizations are still using labor intensive, inefficient processes. On average, it takes the typical company 20 to 30 days to create, negotiate, and finalize any given contract. These contracts are commonly created using standard word processing and accounting software, which do very little to automate the contract creation process.
To counteract this, some businesses have created their own rudimentary solutions using SharePoint and similar programs. These tools do not provide compliance monitoring, however. That means they cannot eliminate or reduce unnecessary spending. These solutions are also not able to provide some of the more complex monitoring options available with contract management software.
These tools allow a company to handle their contracts and legal agreements without involving physical paperwork at any part of the process. This prevents the risk of losing critical physical documents. Web based software packages allow the storage of private and confidential data without risk, while still allowing it to be accessed from many different locations.
A good contract management software package should allow for advanced management of the workflow, and should include software to permit authoring contracts. Standard contract language should be downloadable and monitoring tools for expenditures and contract compliance should be included. Revision archiving allows older versions of the contract to be revisited.
These features combine to create an application that is one of the best when it comes to sorting out all the different problems with managing contracts a business might have. Contract management software allows a business to create quality contacts in a short period of time, increases contract visibility, and helps manage contractual risk. These programs' ability to track commitments and obligations makes contract renewal much simpler.
Contract management software is an excellent way to keep records of business negotiations, gathering and summarizing information from many different legally binding agreements and other paperwork. This can allow contract management personnel to examine existing contracts, and the negotiation process to reduce risks related to production and service delivery.
These business applications also promote internal and external policy compliance and help reduce inflated costs. The result is a better relationship with both customers and vendors, and an easier time managing legal details relating to contracts. Automated tools allow easy checking of contract changes, and make audit procedures much simpler. Some types of contract management software can even notify the right person when a transaction requires attention.
Any business that needs to deal with a significant number of contracts should take a look at how it manages them. If inefficient manual methods are still being used, it might be time to look at a few of the more popular contract management software packages and see how their features could meet company's needs. Automation of contract creation and monitoring can make a significant difference in how a company operates, and even save a lot of money. Not all companies will be right for these types of contract management tools, but many will benefit from the speed and ease of monitoring they offer. Contract management software can make a difference in the way your company deals with legal agreements.
