World Commerce and Contracting has estimated that 60-80 % of business operations are governed by contracts and agreements. Astute and meticulous contract management is, therefore, imperative. They are the very foundation of a business enterprise, ensuring the good health of business relations, and providing the scope for increased profitability and growth.
Organizations should, at all costs, ensure that a team is in place to manage its contracts and oversee their creation, execution, and analysis in order to derive maximum operational and financial benefits while reducing exposure and risks.
Efficient contract management – why it should not be ignored
Despite contracts being integral to the smooth functioning of business operations, many businesses are often caught in inefficient legal contract management resulting in monetary as well as opportunity loss. Industry experts believe that the cost incurred owing to poor management of contracts is 9.2% of a company’s annual income. That is a huge chunk and has a significant bearing on an organization’s bottom line.
The reasons are many and include:
- Inadequate analysis of results vis-à-vis agreements
- Failure in performance evaluation
- Incompetence in identifying the scope for amendments
- Lapses in contract renewals leading to missed opportunities
Strategies to overcome poor contract management
- Implement a centralized contract repository: A central repository of an organization’s contracts integrates every contract from all available sources into one database that can be shared based on user access entitlements. With every contract in a central location, they can be easily organized, analyzed, and secured, leading to better business decisions, easy and convenient amendments, increased quality and security, reduced time and effort, and increased profitability.
- Standardize contract templates and processes: This is the next step in ensuring efficient legal contract life cycle management. The standardization of contract templates and processes saves time and ensures uniformity, increases efficiency, accuracy, and overall client-vendor confidence.
- Automate contract creation and management: Considering the tech strides of the modern era, it makes great business sense to automate contract creation and management. Choose from a plethora of tools and platforms available in the market that offer automation. Automated contract management workflows bring the benefits of fast and accurate drafting, review, negotiation, approval, and execution of contracts.
- Establish strong monitoring: In order to maintain contract compliance at all times, it is important to establish a strong monitoring process that will ensure contract drafting, reviews, and approvals are as per the organization’s policies.
- Maintain strong relationships with customers and vendors: This requirement might seem unnecessary at the surface level, but good customer and vendor relationships go a long way in making contracts simple and easy to execute. Bad relationships reflect in complicated contracts that are often time-consuming to manage and difficult to revise.
- Adopt contract analytics: In the modern era, analytics has come to play a crucial role in efficient contract lifecycle management. They offer business ease and speed by providing accurate risk analysis, tracking renewal periods and requirements, evaluating contract performance, and identifying opportunities to reduce costs and increase revenues.
- Emphasis on collaboration and communication in contract management: Clear communication and a sincere collaboration approach always ensure sound contract lifecycle management. They facilitate accurate, timely, and exhaustive reviews, streamline monitoring, improve the confidence levels of the parties involved, and reduce cost and time leakages.
2023 trends for effective legal contract management
Emerging technologies are showing businesses and organizations never-seen-before possibilities. Artificial Intelligence (AI), analytics, and machine learning are bringing changes that will reshape every business sphere, including legal contract management. In addition, the convergence of data has the potential to bring about a deluge of insights that can facilitate business outcomes to a new level.
Here is a list of emerging trends that will re-define legal contract management in a big way in the days to come:
- Increased adoption of AI
- Greater emphasis on contract analytics
- Focus on data analytics and contract intelligence
- Stronger call for contract collaboration and visibility
- Integration with other business processes
- Increased use of block chain for contract management
- Total emphasis on contract lifecycle management
- Critical focus on contract risk management
- Greater adoption of cloud-based contract management
Harness the power of good contract management services with Cogneesol
Cogneesol has been providing end-to-end contract lifecycle management services to clients for the last fifteen years. Our in-house team of 30 legal experts and paralegals offer contract lifecycle management services that include contract drafting, reviewing, renewal management, additions/deletion to scope across contracts related to property, corporate and securities, trusts and estates, employment, and families.
Our technical and data analyst teams also offer automation and analytics support for legal contract management, helping clients on-board the latest technologies and platforms suitable for their line and volume of work. Through our contract lifecycle management services, we not only ensure compliance with the entire contract but also offer risk analysis, speed of decision-making, and increased profitability. In addition, our domain knowledge and broad exposure have helped to maximize business value for our clients through the years.
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