Ten Business Risks That Can Be Curbed By Using Contract Lifecycle Management
2020 has thrown a huge, completely unexpected challenge for businesses for the next few years. Today, you can hardly find a company that doesn’t need to make at least minor adjustments to its business model, internal policies, or budget allocation. Almost every single industry has been somehow affected by the global pandemic crisis and a brand-new economic environment it brought.
Following the pessimistic line of thinking, you might believe that the current economic downfall is nothing but the tip of the iceberg. Giving the optimistic one a try, you might hope that all troubles will vanish into thin air by themselves. Yet, the realistic approach appears to be the most rational one, and it involves analyzing, optimizing, and digitizing techniques.
Poor attention to contract lifecycle management leads to 30+ hour-long contract negotiation time and a loss of circa 9% of the companies’ annual revenue.
When it comes to optimizing, legal work in general, and contract management, in particular, are still witnessing surprisingly low business adoption rates. The 2019 IACCM survey shows that too often, contract management is broken into separate steps with little connection between them. But in fact, it should be a holistic flow that involves the usage of automation solutions as listed below.
Poor attention to contract lifecycle management, in its turn, leads to 30+ hour-long contract negotiation time and a loss of circa 9% of the companies’ annual revenue. All these are nothing but the outcomes of inadequate contract risk management.
The way you manage the contract lifecycle might cause a whole slew of other problems. Scroll down to find out about the top 10 risks that can be done away with by using quality document management software.
1. Human errors
According to the 2019 DocuSign report, almost 40% of employees think that human-made errors impact contracting. They claim that such errors often lead to delays and unnecessary revisions. Contract management software like AXDRAFT can help reduce the number of such mistakes.
2. Contract ownership fallacies
Can you name a person responsible for a certain type of contract in your company? If your answer is no, chances that your contracts are in a mess are quite high. So if something goes wrong, you will spend a lot of time (and possibly money) identifying the source of the error. Utilizing a contract lifecycle management platform adds clarity to the process since you log the work on each contract and distribute responsibility within the team.
3. Poor access management and data leakage
It is hard to secure sensitive information when you don’t have a clear understanding of what information is available to your team members. So how to be sure that only the right people can assess specific documents? Contract automation enables role management and allows you to set the access level for each employee and business partner.
4. Disrupted review and approval process
Wrong contract clauses and communication breakdowns can leave too much room for disputes between parties. This, in turn, impacts the contract lifecycle and prolongs the review and negotiation processes. And when approval takes too long, there is a risk of not sealing the deal at all.
Notifications about new changes lead to faster approvals and help manage the contract lifecycle properly. In case of any internal shifts, it’s also possible to reassign employees responsible for negotiation so that the company always stays on top of the approval process.
5. Missed automated rollover
Imagine processing hundreds or even thousands of contracts without employing any contract automation, analytics, or centralized contract storage. If that’s about your company, you’ll definitely agree that without any document management system software in place, missing contract rollover dates is inevitable. The best-case scenario is that the contract gets renewed on the same terms, still valid and beneficial for the company. In the worst case, however, the company can lose an option to negotiate new terms, or can be forced into another cycle of unwanted services.
6. Insecure contract storage and distribution
Email or local server hacking happens so often these days that it can be called a classic. Gigabytes of confidential data is compromised then. The same occurs with a contract being accidentally sent to a wrong person. In some cases, it may lead to data leakage or even financial losses. To prevent this, AXDRAFT sends email notifications to inform users about the actions they need to take. At the same time, the contract itself remains intact on the platform under the bank-level data security protocols.
7. Contract compliance failures
Almost any contracted relationship is measured by dates and deliverables. Missing one or both of these may sometimes result in losing opportunities or a large portion of revenue. Contract management software helps level down these risks by maintaining regulatory and operational compliance. Notifying you about the deadlines well in advance, it ensures that you run timely audits. This helps your company avoid overpaying, underdelivering of services, or even penalties.
8. Mess in a knowledge base
Contract managers often serve as a company’s knowledge base. Yet, this knowledge vanishes when they leave. Fortunately, there is another way of having everything under control 24/7 - it’s nothing else but contract automation. It brings structure and integrity to the process and allows you to track the contract in the database and pick it up whenever needed.
9. Zero reporting clarity
To spot vulnerabilities and identify areas for improvement or cost-saving, companies should evaluate their contract activity. Contract lifecycle management tools allow you to prepare customizable reports and assess your performance against your KPIs.
10. Poor customer experience
A company that fails to comply with its contractual obligations ruins its reputation. Contract negotiations that take too long may finish with the deal off. Too many errors in the contract make a company look unprofessional and show a lack of respect. In the business world, all of these flaws are translated into the language of money, but the good news is that they can be curbed by using proper contract management software.
Connecting the Dots
Contract lifecycle management can help you mitigate most of these risks, saving you time, money and resources. You won’t need to keep all the information about terms, deliverables, or specific agreement conditions in your head. An automated tool can become your ideal helper and do this job for you.
Ready to bring innovation to your contract management? Reach out to us at AXDRAFT, and we will build custom-tailored contract automation for your company.