6 Benefits of Contract Management Software
Managing contracts becomes increasingly complex as the organization grows. Before you know it, large numbers of contracts are stipulated with preferred suppliers. With no system in place, the overview gets lost and out of control, resulting in an inefficient and costly process.
It often happens that contract are not renewed or terminated on time. Ongoing contracts have not been mapped and neither is the up-to-date status. Many organizations lack any type of contract management process.
Initiating any type of contract management when there are already dozens of current contracts can be a colossal task. In this blog we look at 6 benefits of contract management software.
1. Contract expiration dates are always known
When expiration dates are unclear, contracts are tacitly extended without any consultation. This is especially painful if the partnership wasn’t particularly successful, but also if you wish to extend the cooperation.
The expiration date of a contract is the ideal time to review the current contract with the supplier. Usually, both parties benefit from an extension, presenting an opportunity for a better deal. The supplier has a guaranteed sales and the buyer a competitive price.
If these dates aren’t properly documented, it is nearly impossible to be notified and act on time – whether or not to improve or cancel the contract.
2. The online archive replaces physical documentation
While many organizations – SMEs and enterprises alike in our experience – still use a paper archive, contract management software no longer necessitates keeping the paper versions around. Contracts can always be examined digitally, from a central overview.
This benefit simply means no-one has to search for the relevant binder to get data from the contract. Any information can be retrieved from behind a computer (or mobile device).
The central overview also ensures that no restructuring of binders is necessary every few years.
3. Contracts are always available everywhere
A contract is always available to anyone (with the proper access level). Nobody needs to sift through stacks of paper anymore. Role-bound access only gives the right people insight, but anyone can quickly and easily find out who has access to the archive.
Additionally, all this information is accessible from anywhere with mobile devices.
4. Book recurring invoices automatically by contract
If the contract management software is integrated with automated invoice processing, purchase invoices can be automatically matched by contractual agreements.
Don’t encrypt the recurring invoice manually, but extract payment conditions automatically from the contract. If installment and contractual specifics are a match, manual approval or handling is no longer required.
It is also possible to see how many invoices have been booked on that specific contract. False invoices for non-existing or terminated contracts are disapproved and fraudulent transactions captured before they go to the bank.
5. Order from contracts
Prevent maverick buying by linking purchase types with contracts. This prevents unstructured purchases from different suppliers, unfavorable purchasing conditions and outsourcing beyond the contract.
6. Supplier performance is measurable and insightful
Because all data is available in the cloud, the organization gathers information and gains insight into its supplier’s performance. Performance per supplier is measured with KPIs, such as quality and quantity of deliveries. The contract summary shows all agreements made with the various suppliers. With contract management software it is also possible to post qualitative feedback to contracts or individual purchases.
Based on this predetermined criteria, a weighted decision may be taken to extend the contract with the supplier.
The digital benefit of contract management software
Simply put, the organization saves a lot of time and effort by keeping contracts with suppliers in a central (digital) location.
Combined with the automated invoicing, this can ensure that the process is as efficient and reliable as possible. That’s interesting for both the purchasing department and the creditors administration. Ultimately, by digitally matching invoices to contracts and other data, the organization never makes a false, fraudulent, or wrong transaction.
Through systemic evaluations, only beneficial contracts are extended. An automated notification to the budget holder makes sure that renewals are never overdue or forgotten. The bottom line: contract management software pays for itself.
