For any organization, managing contracts is a very tricky and daunting task. For instance, a simple contract expiry query or the effort to locate the latest contract version can handicap a transaction. Businesses, to overcome such a challenge and maximize workflow efficiency, have taken to document management system (DMS). Progressive organizations, for better management, prefer advanced contract management software to an everyday DMS. In this blog, we’ll explore why is contract management software important.

Why Use Contract Management Software

Contract Management software provides necessary insight into contract data, facilitates collaboration between parties, and saves time and cost with negligible risks. A report once stated that ineffective Contract management software could cost businesses $100 billion per year in missed savings opportunities.” Therefore, a contract management system is a better way to contract management which also takes care of tracking and negotiation. Good software is necessary for reducing supply chain risk and ensuring compliance at all stages of the supply/supplier relationship. Advanced contract management software is essential to achieve success with a product launch, global expansion, hiring, and other events.

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5 Reasons Why is Contract Management Software Important

1. Contract Expiration
   

   An unclear expiry date leads to an extension of the contract. It is okay if the partnership worked out successfully but certainly not desirable if either party isn’t satisfied. The contract expiration date is an important indicator to review relationship with the current supplier. It is for both parties to benefit from a contract extension and make way for a better deal. While it ensures confirmed sales for the supplier, it also assures the buyer a good bargain. An advanced contract management software factors in the expiration date so it can render decision alert to the user.

   Read more: 7 ways you can identify and mitigate contract risks

2. Document Digitalization

   Our market insight informs us that many organizations are still using paper. Inducting advanced contract management software is a lean method to embrace technology and improve the environment. Document digitalization facilitates accessible and central examination at any given time. Not only on desktop applications, but an advanced solution is also available on-the-go; i.e., your mobile devices. In the case of later, role-bound access to information is possible anytime without having to restructure your binders every few years.

3. Contract Authoring

   With an advanced contract management solution in place, authoring contracts becomes easy and helps avoid repetition. A contract of similar terms, conditions, and legalese can be a template for repeat use. You can skip the redundancy of contract-drafting multiple times by making use of standard template pre-approved by your legal team and editorial board. It is as if the contracts will write themselves and offer you enough room to focus on other strategic business matters.

4. Automatic Booking

   An advanced contract management software has the facility of automated invoice processing. With it, you can easily match a purchase invoice to contractual agreements. The good thing is that you don’t have to encrypt a recurring invoice manually. The solution will automatically extract payment conditions from the contract. There is no need for manual intervention if installment and contractual specifics are a match. In addition to this, you can easily track the number of invoices booked for a particular contract and prevent fraudulent transactions for all in-valid contracts.

5. Performance Evaluation

   Finally, an advanced contract management system helps you with the insight needed to evaluate your supplier-performance. As an organization, you’ll have a standard contract protocol to measure supplier-performance. Such information helps you with deciding whether or not you can continue with a particular supplier. Performance evaluation also helps businesses reward the best supplier and put in effort toward sustaining a long-term profitable relationship.

Learn More: Benefits of Contract Management Automation

Zycus Case Study: Business Case for Contract Management System

To truly appreciate the transformative power of contract management software, consider the experience of the leading US retail giant that faced challenges due to non-standardized procurement processes that caused significant delays and visibility issues. By adopting Zycus’s Source-to-Contract suite, they witnessed a 40% reduction in contract cycle time and a 35% reduction in request cycle time. These improvements were instrumental in boosting efficiency and significantly reducing manual errors, highlighting Zycus’s ability to streamline procurement operations effectively. Read the full success story

Read more: How do GenAI Agents Streamline Contract Management?

Conclusion

As businesses navigate the complex landscape of 2022 and beyond, meeting and exceeding client expectations is critical. The advancements in supply chain technology, particularly in contract management software, present organizations with opportunities to enhance their operational capabilities significantly. By proactively integrating advanced systems like Zycus, businesses can not only streamline their processes but also ensure they are well-positioned to extract maximum value from their contracts. Implementing a robust contract management system today is a strategic move that prepares businesses for the competitive challenges of tomorrow, fostering growth and sustainability in an increasingly tech-driven world.
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FAQs

Q1. What is the primary benefit of using contract management software?

Contract management software streamlines the entire contract lifecycle, reducing delays and improving efficiency.

Q2. How does contract management software enhance compliance?

It ensures adherence to contractual obligations and regulatory requirements by providing automatic alerts and comprehensive tracking features.

Q3. Can contract management software help in risk management?

Yes, it identifies potential risks through analytics and reporting, enabling proactive risk mitigation strategies.

Q4. How does this software improve collaboration within teams?

It offers centralized access and real-time updates, facilitating seamless collaboration among stakeholders.

Q5. What role does contract management software play in cost savings?

Automating routine tasks and minimizing human errors significantly reduces operational costs and financial risks.
Related Read:

1. Blog – 10 Best Practices for Procurement Manager
2. Blog – Ultimate Guide to Contract Management: Benefits & Best Practices
3. Why Every Department Needs CLM – Procurement, Legal, and Sales
4. Research Report: Building An Effective Contract management process
5. iContract Apps: Contract Management. Now 10X with Merlin GenAI Apps
6. Whitepaper: Astute Contract Risk Management: Best Practices to Mitigate Risks
7. Blog – The Greatest Contract Ever Signed
8. Contract Management Software
9. Analyst Report – Contracts as a Connector – The case for improved contract management
10. White Paper – The Why, What & How of Contract Management
11. Revolutionizing CLM: The Strategic Edge of ESG Integration
12. Enhancing Contract Management with Automated Clause Addition