Procurement is anything but easy, but contract management promises to make it far less of a hassle. By improving their governance of the data underlying robust legal agreements and staying on top of changes throughout the contract lifecycle, companies improve their ability to source vital business assets without as much of a struggle.
One of the keys to an effective agreement management process — and impactful procurement — lies in maintaining contract visibility. In this blog, we will discuss why contract visibility is so critical to your mission and how automated solutions can help you achieve it.
Common Contract Management Pain Points
Modern business practices mean that there are a number of hurdles to overcome on the road to effective contract management. For instance, the finalized deals you strike with vendors may be the result of collaborative authoring that obscures the typical agreement workflow. When combined with the fact that individual suppliers have markedly different needs, this can contribute to inconsistencies from one contract to another. In fact, inconsistencies among contracts resulted in slower revenues for 57% of organizations, while 50% reported missing out on business.
Inefficiency is also a massive problem for forward-thinking enterprises. Many organizational structures make it hard for these stakeholders to gain visibility into the business processes that depend on their work, such as when corporate lawyers fail to anticipate the low-level supply-chain consequences of adding new clauses to contracts. Such disconnects can lead to increased spending and delivery delays as contracts bounce from one department to another in an endless game of back-and-forth.
Is Enhancing Contract Visibility the Answer?
These problems vary widely, but many share a common factor: their lack of visibility. When contract authoring and upkeep get embroiled in complex departmental workflows, long email chains, and case-specific sourcing, it becomes harder to peer into the performance indicators that reflect healthy business practices.
Companies that shift towards more transparent contract management practices grant their leaders the power to make decisions that promote organizational good. Here is why more companies are using software-driven automation to improve the way they work.
Contract Visibility Makes Compliance Easier
According to PWC, one of the biggest drivers for implementing a contract management solution in the Banking, Finance, and Insurance services sector is regulatory compliance. The benefits of contract compliance can extend to other industries as well.
Contract compliance management software offers a central repository where all agreed contracts with vendors can be accessed by stakeholders holding the required permissions. This feature allows for contract terms to be easily viewed in situations when there are doubts over vendor compliance. It also allows for any necessary adjustments to be made to contracts without delay in the event of changing business or market conditions.
With automated contract management and procurement systems, organizations also get the added benefit of being able to generate up-to-date contract templates directly from the system that take into account any universal changes, such as updated clauses. Under manual contract management processes, the same contract template could be generated repeatedly from a user’s desktop, which may eventually become out of date and, as such, non-compliant.
Such centralized policies free your staff from needing to remember to add compliance elements. They also make it simpler to implement top-down changes that keep your entire organization on the right legal path.
Managing Renewals Takes Less Work
Automation is not just for responsive decision-making. It also empowers you to recognize when proactiveness is needed. By tracking the agreement lifecycle intelligently and learning what kinds of events are associated with specific stages, contract management tools make it easier to handle renewals.
Your system may send email notifications to vendors when their contracts are nearing their expiry dates. Or, it might let you know when it’s time to refresh vendor contracts so that you can reach out to keep up business relationships. In either case, heightened contract visibility contributes to easier renewal procedures that don’t depend on fallible human recall.
Data Access Fights Risk
Risk management is a complex task that demands an accurate big-picture perspective. To understand the potential dangers of working with specific vendors or engaging in certain types of deals, you need the experience — and historical data — to recognize patterns.
Automating your contract management procurement process lets you access critical procurement data with greater ease, and there are countless ways to use that power for beneficial ends. You may employ AI-powered text analytics tools to highlight unnecessarily vague phrasing, build a system that mines prior agreements to contextualize your accounts payable and ERP data or generate compliant signed invoices that cut down on fraud. No matter which specific changes you decide on, being able to peer into information en-masse will ensure that you’re basing your choices on more accurate feedback.
Contract Visibility Translates to Accountability
The power to carefully examine distinct elements of the procurement process leaves you better equipped to target and eliminate inefficiencies. When you can instantly see how existing approval and information-sharing practices unfold at a fine-grained level, it is much easier to assign ownership.
To keep your team members honest with traditional contract management strategies, you may have to add to their workloads by forcing them to record their progress in supplemental databases. Such practices are inherently inefficient, and when people neglect to follow them, they lose any value they could have had. With automation tools that promote contract visibility, workflow management is built in from the start. These tools make it far easier to embark upon company-wide initiatives that don’t require extra steps to centralize information. They also help key stakeholders garner insights from impossibly complex feedback.
Is It Time to Change How You Procure?
Switching to automated procurement solutions is a critical step forward for any company that wants to grow. As the business world becomes increasingly globalized, enterprises that seek new opportunities will find the need for efficient oversight ever more pressing.
Modern vendor and contract compliance reporting tools help businesses stay on top of complex vendor relationships and refine their agreement creation processes using intelligent automation. By pursuing augmented contract visibility, you stand to place your enterprise far ahead of the competition in the race for market share.
