By Thomas Schneck – Misaligned and poorly constructed contracts create both increased cost and increase risk for many organizations. According to the International Association for Contract and Commercial Management:
- 77% of companies “frequently” suffer from misaligned contract scope and goals.
- 55% experience confusion in contractual responsibilities.
- 48% experience have challenges tied to price changes and delivery terms.
All of this is a direct byproduct of a manual and adhoc approach to contract management. Getting rid of the paper through digital contracts represents a key discipline to maximizing financial and operational performance, effective subcontractor management and minimizing contract risk (e.g., letting contracts that are not valuable auto-renew, continuing to pay on cancelled contracts, letting valuable contracts lapse).
There are three main elements in an effective enterprise contract management strategy:
Getting from idea to agreement– How can you streamline the mechanics of the contracting process?
- How can you use contract templates to accelerate the editing process?
- Is there a clear and consistent contract structure and are the main components clear (term, notice, scope, billing)?
- Is there an automated process in place to notify you about deadlines and due dates?
- Do you use electronic signatures wherever possible?
- Are your employees able process contracts anywhere, anytime, and on any device?
- Creating a clear an auditable record– Who agreed to what, when did they do so, and how can you prove it?