What is a Contract Management Solution?

Contract management solutions improve risk management and spend management by continuously monitoring contracts throughout the contract lifecycle. It is its responsibility to ensure that all parties to a contract are accountable for their responsibilities, which helps prevent financial losses and legal disputes. The contract solution aims to boost financial performance and minimize risk by systematically managing contract creation, execution, and analysis.

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Why are Contract Management Solutions Important?

Today's complex world puts an increasing pressure on organizations to reduce costs and improve performance. A contract management system solution is essential to a successful business, as manually managing contracts can be very time-consuming. Without effective management solutions, businesses and organizations are unable to keep track of thousands of their written contracts. This leads to decreased efficiency and productivity. Lack of management can lead to a multitude of heavy costs, such as the absence of control and organization, increased administrative cost due to terrible coordination, and missed economic opportunities. In order for a business or organization to flourish, it is paramount to invest in contract management. 

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Benefits of a Contract Management Solution

A systemic contract management solution allows users to schedule notifications and track critical milestones. Getting rid of manual processes and centralizing your contract database makes it easier to control workflows. Furthermore, a centralized database prevents misunderstandings and disagreements by ensuring that all parties understand their responsibilities underlined in the contract. In other words, contract management system solutions ensure that contracts are followed. Businesses and organizations can save time and money by streamlining the contract management process, ultimately reducing legal fees and avoiding unplanned renewals of services. Another high-value benefit is spend visibility. It has been reported that best-in-class procurement teams save 37% more than their peers each year. By purchasing from approved suppliers at the right time, in the right quantity, and at an agreed price, one can reduce "off-contract" spending. A sourcing cycle's savings can be maximized by delivery terms, tracking rebates, and volume discounts. 

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Features of a Contract Management Solution

• Flexible approval workflow
• Managing each phase of the contract development cycle 
• User-defined controls
• Tracking contract expirations, contract utilization, and off-contract spending through alerts and reminders

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Steps of a Contract Management Solution

• Contract Request: Integration of contract management software with line-of-business systems (LOBs) is crucial to the success of a contract management solution. By eliminating system access as a bottleneck in the process, anyone in the organization can initiate contracts on familiar devices and applications.
• Contract Authoring: Users can create contract requests, amendments, and renewals by dragging and dropping language from an approved clause library and using guided tools to create templates. For example, they can dynamically insert required language for specific clauses and terms, track changes at the clause and provision levels, set alerts, and configure approval workflows. Ideally, compliance should be achieved with the least amount of effort. 
• Contract Negotiation: Users of contract management solutions can receive redlined contracts electronically by reading changes in both structured and unstructured metadata. In addition, they can route and tag redlined contracts for stakeholders to review.
• Contract Approval: Multi-criteria approval processes are available in more sophisticated contract management solutions. A custom workflow can be tailored to fit the idiosyncrasies of any contract using the solution's interface, eliminating bottlenecks and minimizing delays. It is possible to approve via mobile devices with the most sophisticated solutions. As business conditions evolve, the organization can maintain control and enforce standards while optimizing the approval process.
• Contract Execution: The signature process is shortened through contract management solutions. An essentially automated, electronic procedure should also allow hardcopies to be uploaded.
• Contract Renewal: In order to take advantage of contract renewal opportunities, companies can use a contract management solution to identify candidates, alert managers in time, and automatically draft new contracts based on the contract that is currently in force.
• Contract Auditing and Reporting: Among the audit and reporting options offered by contract management solutions are alerts for contract compliance, field audit tracking, on-demand report generation, easy integration with third-party reporting tools, and access to contract records with one click.
• Contract Amended: Ensures a finalized view of various contract amendments through the contract management solution.