No matter what type of business environment or sector you choose, organisations are constantly looking for ways to streamline processes and improve efficiency. One such area is contract management. Contracts are a vital part of virtually all business operations but managing them manually can be time-consuming and prone to costly errors. Additionally, contract management plays a part in many other processes, and centrally improving multiple processes at once can be a tall order. This is where cross-functional contract management software comes in to help legal teams and other relevant business professionals.
Contract management software offers a wide range of cross-functional benefits that can positively transform the way organisations handle their contracts. It’s more than simply a contract repository for contract data and documents. Let’s explore some of the key cross-functional benefits of contract management software, including contract lifecycle management, eProcurement, eSourcing, purchase order management, and electronic signatures.
1. Contract Lifecycle Management
Contract lifecycle management (CLM) refers to the process of managing contracts from creation and drafting to execution and beyond. Contract management software provides a centralised platform where organisations can create, store, and track contracts throughout their contract lifecycle. This process is meant to ensure that all relevant team members and stakeholders have the latest and greatest version of the contract, reducing the risk of miscommunication and disputes. This contracting process is significantly streamlined when business professionals can reap the benefits of contract management software.
For example, let’s say a company wants to renew a contract with an existing vendor. With contract management software, they can easily track the contract’s expiry date and set up automated reminders for renewal dates. This proactivity helps the company stay on top of contract renewals and avoid any potential lapses in services.
Additionally, the benefits of contract management software allow organisations to set up automated workflows for contract negotiation collaboration. This functionality ensures that contracts go through the necessary review and approval processes, reducing the risk of unauthorised changes or non-compliance. Such tools include version tracking, audit trails, auto-redlining, document check-in and check-out functionality, and the aforementioned approval workflows.
2. E-procurement
E-procurement is the process of purchasing goods and services electronically. Leading contract management systems can integrate native eProcurement systems, allowing organisations to streamline their procurement processes. By linking contracts to procurement records, organisations can ensure that they only work with approved vendors and that pricing and terms align with the negotiated contracts. E-procurement processes can be significantly improved with the benefits of contract management software.
For instance, let’s imagine a company needs to analyse the pricing and performance of a vendor from whom they purchase office supplies. With contract management software, they can analyse purchase orders and subsequent contracts, ensuring that they’re maintaining relationships with reputable vendors and that the pricing and terms are consistent with the negotiated contracts. This oversight helps the company maintain compliance and avoid unauthorised purchases.
Furthermore, contract management software can automate the approval process for procurements, ensuring that they are reviewed and approved by the appropriate stakeholders. This reduces the time and effort required for manual approval processes and improves overall procurement efficiency – one of the biggest benefits of contract management software solutions.
3. E-sourcing
E-sourcing refers to the process of identifying, evaluating, and selecting suppliers electronically. The features and benefits of contract management software can facilitate better eSourcing by providing a centralised repository of supplier information, including qualifications, certifications, and performance history.
For example, let’s say a company is looking for a new supplier for a specific product. With contract management software, they can easily post a bid and access supplier information, such as their qualifications and performance history, to make an informed decision. They can enjoy advanced features for bid evaluations and scoring, subsequently award a bid, and manage the bid and contract. This integration of procedures streamlines the supplier selection process and ensures that the company is working with reliable and compliant suppliers.
Additionally, contract management software can automate the supplier onboarding process, allowing organisations to efficiently gather and verify supplier information. This reduces the time and effort required for manual vendor and supplier qualification processes and improves overall sourcing effectiveness – another of the cross-functional benefits of contract management software.
4. Purchase order management
Purchase order management is the process of creating, approving, and tracking purchase orders. The functionality and benefits of contract management software can integrate with purchase order systems, automating the creation of purchase orders from pre-approved templates while enjoying comprehensive fulfilment oversight, asset transparency, and tracking.
For instance, let’s say a company needs to create a purchase order for a product. With contract management software, they can easily generate a purchase order directly from a contract with a template along with punchout and shopping cart functionality for a visually engaging and unified catalogue, ensuring that the terms and conditions are reflected accurately. This eliminates the need for manual data entry and reduces the risk of errors.
Also, contract management software can provide real-time visibility into the status of purchase orders, quantities received, assets of PO, details on preventative maintenance, and more. This oversight can allow organisations to track and monitor their procurement activities. Organisations can stay on top of their purchasing processes and ensure timely delivery of goods and services – highlighting the benefits of contract management software for integrated processes.
5. Electronic signatures
Electronic signatures are a secure and legally binding way to sign contracts electronically. Leading contract management software includes both native and third-party electronic signature capabilities, allowing organisations to streamline the signing process by up to twenty percent and eliminate the need for printing, scanning, and mailing physical documents or emailing digital contracts and managing them in shared drives in a disorganised way.
For example, let’s say a company needs to sign a contract with a client. With contract management software, they can send the contract electronically and obtain an electronic signature from the client. Furthermore, based on a pre-approved workflow, the software can automate the gathering of signatures from multiple stakeholders efficiently and without wasting time. Additionally, organisations can enjoy a more secure and notarised process with digital signature attestation. This functionality and more speeds up the contract execution process.
Moreover, contract management software can provide audit trails and timestamps for electronic signatures, ensuring the integrity and authenticity of the signed contracts. This enhances the legal validity of the contracts and provides a higher level of security compared to traditional paper-based signatures or decentralised digital processes. As such, it serves as one of the greatest benefits of contract management software, centralising and streamlining the execution process.
Key takeaway
There are wide-ranging cross-functional benefits of contract management software that can transform how organisations manage their contracts and so many other important documents and data. From contract lifecycle management to eProcurement, eSourcing, purchase order management, and electronic signatures, contract management software provides a centralised platform for efficient, compliant documents and more fruitful business relationships.
By leveraging the benefits of contract management software, organisations can streamline their processes, reduce risks, improve contract compliance, and enhance overall efficiency. Whether you are a small business or a large enterprise, contract management software can help you take control of your contracts and unlock new opportunities for growth and success.
To learn how to more easily draft contracts, get contracts reviewed, collaborate on negotiations, and much more to improve contract management processes, book a free demo of Contract Insight® contract management and eProcurement software today!
Contact John O’Brien, CEO at Four Business Solutions – global business consultants and software integrators specialising in business process improvement.
