Why Contract Management Matters
Contract management matters because our businesses are broadly based on contracts: 80% of business activities include dealing with contracts in one way or another. Despite that clear fact, about 20% of all contracts are permanently missing, globally.
On top of that, the International Association for Contract and Commercial Management (IACCM) says that improved contract management means a boost to the bottom line as well. That should indeed matter for every business owner. Tim Cummins, the President of the IACCM says in his blog post “Contracts & Governance”:
“The (IACCM) study suggests that the average corporation could boost its bottom line by almost 10% if it invested in improving the quality of contracting. For many companies – especially those in more complex, project-based industries – the prize could be much higher – perhaps as much as 15%.”
Read and weep: depending on your industry and size, well-managed contracts can improve your bottom line by 10-15 %! How on earth do you succeed in that? According to Tim Cummins taking advantage out of contracts is simple.
”… it is certainly time for management to take an interest not only in closing contracts, but also ensuring that they deliver expected benefits. That must surely be a major indicator of the quality of governance.”
Yes, Tim is mostly writing about large corporations and their complex contract processes, but we believe that even small improvements in the less complex environments are bringing in cost savings and better quality of operations.
List of Contract Management Ideas for Business Owners
Here's a simple list of ideas you can do with your contracts and other administrative documents to get benefits out of them:
- Support your sales and marketing organization with up-to-date contract data. Sales and Marketing are the most important function for any business and they indeed deserve better contract service than they are getting today (crappy CRM’s and busy Financial Managers as a bottleneck). And please stop harassing them with email attachments and offer the required information via the cloud.
- Offer a digital contract vault for your support functions as well. HR professionals and IT leaders benefit hugely if they have access to relevant HR/IT contract data any time they need. HR pros can stop worrying about where the sensitive personnel data is when put in a safe and secure place in the cloud (not even IT admins can access that.)
- Give some peace of mind to your entire administrative team and set up the most important contracts list and ensure that you have automatic reminders on each one of those.
- Start to invite and administer your board meetings and meeting materials digitally. Note. this does not mean email. (Disclaimer: ContractZen has a simple function for meeting management. It’s incredibly effective.)
- Utilize your contract management for corporate governance-related tasks. In its simplest form, store all your legal and administrative documents in the safe digital cloud vault, from where you can share those directly with your auditor, tax auditor, or lawyers in the merger or acquisition situation. I guarantee due diligence readiness feels good!
- Add overall transparency. Organize your company’s contracts in a way where each manager who needs contract information has easy access to it. Via mobile, and on the traveling foot. It pays off.
Our customers and partners have shared their stories of the benefits, and those are huge: time savings, better quality and fewer mistakes, better employee and customer satisfaction, fewer contractual errors and failures, lower financial and legal risks, and finally, less contract related stress – more peace of mind. And all this converts to Dollars and Euros. Think about it.