By Phil Gibbs on December 7, 2010
Contract management services can help companies save time and money by insightful and timely access to key provisions.
By: Michael Berman, JD
So you need to pull the lease agreement, the client contract, phone agreement, software license, marketing agreement, etc. The number of agreements involved in running and operating a business continue to explode. According to the institute for Supply Management, 70% of all business to business transactions require a signed agreement.
Do you know where all your contracts are? Do you know the terms of these agreements? If you answered no, then you are like most companies. In fact, 71 percent of companies surveyed by the Journal of Contract Management could not even find at least 10 percent of their contracts.
If you can’t find the agreement, then your company has no idea what your obligations are or how much money is owed or at stake. Your company could be unknowingly violating contractual provisions, which can damage your business reputation, incur lawsuits, and other damages. More specifically, your company can quickly become obligated for services that are no longer needed because the lease on the copier was automatically extended or the software license renewed. Most companies try to solve these issues by the most expensive means possible, by assigning additional personnel to manage the terms of the agreement. However, there are more cost effective means for solving these problems.
There are many different software packages that claim to help with contract management that range in price and complexity. Most contract management software packages provide a storage area for contracts to help you locate these agreements. Unfortunately, shared storage is only part of the solution. The features needed:
- Allow you to search for contracts based upon criteria that is important to your company
- Provide the ability to create reports based on key contract terms
- Email reminders of key dates and important terms
- Implementation of your agreements on the system
By having searchable criteria, your company can quickly find key business and drastically reduce the amount of time needed to find the relevant information. These time-saving features are amplified by the ability to generate custom reports. For example, how long would it take to generate a report on which vendors can increase price next year? With an automated system, the answer is a few seconds or clicks away.
However, email reminders of key dates and important terms create an even greater value because they deliver information on a timely basis to prevent unwanted renewals, price increases, warranty expiration, and other items that can directly improve your company’s financial performance.
How much time will this take? We all know that time and money are the two most precious resources that our companies have. Most companies are reluctant to obtain a contract management system, because of the enormous amount of time needed to get their information in these systems. However, there are companies that will implement your contracts on to a contract management system, which drastically reduces the internal cost of implementation.
Business owners are often unaware of the fine print and the monetary effect it can have on their enterprise. However, the right contract management system can alleviate risk and remind each organization to take advantage of key terms to improve profitability.
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