A professionally managed, proactive organisation will have all of its contractual knowledge easily accessible, effectively stored, and actively managed for ongoing monitoring and control. After all, the contract defines the business relationship on both the buy and sell side of the business. Essentially, your contracts underpin your company`s assets and liabilities.
Use of contract management software can provide companies with convenient access to the information they need to re-negotiate and enforce existing contracts.
Paul Mullon, Marketing Director, Metrofile.
As to the nature of business in the modern era, contracts have been elevated to the level of vital business information. In today`s shrinking economy, the focus has shifted to cost reduction and increased operational efficiency. With this in mind, organisations are re-evaluating their contractual relationships and prioritising efforts to streamline operations.
The first step in cutting costs is to obtain an accurate picture of current contracts in order to analyse where savings can be made. Due to the increasing number and complexity of contracts in business, these legally-binding documents require an effective contract management information system in place, built around best practice.
Are you seriously prepared to allow your contracts to be held in a paper-based format, in various offices, in a decentralised unstructured manner? How are you ever going to gain proper control and understanding in your business? The answer is simple - real control will never be achieved, costing you time, money and possibly your business. On the buy side, procurement disciplines have seen radical change, especially since 2000.
High expectations
As procurement becomes more visible, enterprises will expect it to deliver more; more control, more profit and more risk management. Distributed business models often result in distributed decision-making. While this strategy facilitates speed of implementation, it is counterproductive to cost savings because it only takes advantage of the buying power of a small portion of the organisation.
On the sell side, delivering on your formal commitment and ensuring customer satisfaction speaks for itself.
Many organisations do not have an organised process for storing and retrieving contract information. Even when a dedicated contract team exists, data can be managed in paper files and spreadsheets, or not at all. Managing contracts in hard-copy files costs unnecessary time in research. Often, money is lost due to the fact that it is easier to pay the bill than dig up the contract and find the information needed. Spreadsheets are better, but are limited in their ability to standardise and cross-reference information. In addition, contracts managed by spreadsheet are often handled at a decentralised level, making it difficult to obtain a consolidated view of supplier relationships and obligations.
Use of contract management software can provide companies with convenient access to the information they need to re-negotiate and enforce existing contracts. Consolidating contract information into a central repository enables firms to maximise their buying power, cut costs and negotiate more effectively going forward.
In the current economy, it is more important than ever for businesses to take control of their vendor and customer relationships and maximise return on investments. The concept of taking contract management to a higher level using the Internet and advanced contract management software is here. Companies seeking to minimise costs and maximise savings would be well advised to examine their contractual obligations. They should take advantage of the opportunities for consolidation and centralised management that are made available by new technologies.
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