Top 5 Benefits of a Good
Contract Management System

By PracticeLeague, November 26, 2021   |   8 Min Read

A contract can be said to be the core of the business enterprise, the bedrock on which rests the foundation of all transactions that take place in any company. The advent of the technology revolution within Contract Management space has served to unlock a range of critical benefits that companies can realize, given the centrality of the contract in literally every operation, function and transaction. Let us take a quick look at some of these:

Productivity Improvement

In simple words, productivity can be defined as how efficiently a set of inputs can be converted to the desired outputs in any organized activity. It refers to the efficient use of resources to achieve the desired results. The keyword here is "efficient use of resources" to achieve the results, meaning maximizing output with optimal use of inputs.

This is where a CLM can really unlock tremendous value by speeding up the entire process of contract creation through myriad high-impact features, like pre-defined contract templates, automated contract creation, the ability to clear high volumes of contracts in a single click or in batch processing, collaborative development including multiparty collaboration, approvals with detailed audit trail & version history, inbuilt esignature support and more.

Not only that, but further benefits can also be had, through many other pertinent features like deviation tracking, comments and defined approval processes, which serve to reduce the potential for error. There is a lot more, but the above highlights focus on two key efficiency and productivity parameters: faster processing and accuracy, both of which not only give better results but also improve the collaborative spirit, teamwork and culture within an organization, among other things.

Improves Contract Visibility

This is one of the most powerful features of a Contract Lifecycle Management Software Suite; and goes beyond reports and the dashboards. The story here starts with the centralized storage of all your contracts in one central repository. This centralized access to all contracts of the company unlocks unmatched visibility into the contract’s status in terms of obligations, due dates, deadlines, user-wise & department-wise status, renewals and more.

The contract repository is what enables entity-wide analytical reports, insights, reports, data summarization, tracking of related contracts & amendments, automated & value-driven reports. These can be both customized as well as scheduled reports. One can also configure role-based dashboards, have analysis on the dashboard on types of contracts, deadlines, contract type analysis or contract summary.

This consolidation of all this data across multiple departments, entities and functions gives a rich deep insight into the exact status of the contracts and thereby into the business as a whole. This can be further be integrated with the core systems for complete downstream process integration and to improve contractual performance.

Financial Optimization

An efficiently implemented CLM can positively impact the organization’s bottom line by saving money. This can be achieved through a combination of time savings due to faster more efficient processing, combined with cost savings that arise from improved compliance {thereby lesser risk}, and productivity gains from functional contracts, for example procurement – wherein a CLM enables a transparent process, faster execution and the significant direct monetary savings through consolidated purchasing and aligned rate negotiations.

Any modern organization nowadays handled thousands of such contracts annually, and when we extrapolate these savings to the organizational scale, it has the potential of bringing the significant cost savings, leading to optimal usage of financial resources.

Improves Compliance

A CLM, through its excellent compliance management module ensures compliant contracts with the significant reduction of errors, and ensures the business remains smoothly operational; free from interruptions that arise from missed milestones, expired contracts or expired obligations, or even documentation hassles.

This starts right from contract creation where one can define mandatory documents, meaning contracts are compliant with all statutory and organizational norms from the word go.

In an operational contract, a CLM ensures constant monitoring of contractual obligations, as well as timely reminders for due dates, upcoming expiry or renewal requirements and other event triggers, with in-built escalation to competent senior managers in case of missed deadlines or TATs. All of the above, and more, come together to radically transform the compliance status of your contracts.

Risk Reduction

The combination of the above 2 – visibility and compliance – leads us to one of the most vital business advantages that can be achieved from a properly implemented CLM - Risk Reduction. This has many parameters and is an article unto itself, but some of the key areas that serve to reduce risks are:

Thus, these are just some of the key business gains that can be achieved from a Contract Lifecycle Management implementation – higher productivity with the connected efficiency, at optimal cost in an environment of top-notch deep visibility and solid compliant contracts and related processes. All of these automatically lead to the reduction of contractual risk, leading to an improved risk profile for an organization.