Contract management is an important part of the procurement process that involves the creation, negotiation, and storage of all legal documents that govern a company’s purchase and delivery of goods and services.
Contract management enables procurement teams to effectively manage vendor relationships, negotiate pricing, and plan the delivery of goods and services while simultaneously mitigating risk. The terms negotiated by procurement teams are governed by legal agreements, so contracting and procurement processes are very much dependent on one another. Procurement cannot operate effectively without an adequate contract lifecycle in place and vice versa.
Procurement teams often leverage contract management platforms like ContractSafe in order to improve the efficiency of the contract lifecycle and procurement processes. These platforms can save teams a lot of time by automating many of the manual tasks associated with contract management. These tools can also save a lot of money by ensuring compliance, avoiding auto-renwals, and ensuring payments and price increases happen on schedule.
How Contract Management Software Benefits Procurement
A well-managed contract lifecycle is the key to enabling efficient procurement. While procurement teams are focused on sourcing goods and services at the best price, contract management software can help streamline contracts that govern these deals.
Without contract management software, procurement teams would have to turn to shared drives, spreadsheets, and calendars to manage the contract lifecycle which is not only time-consuming, but it’s expensive and risky as well. Below are some of the ways a robust contract platform like ContractSafe can benefit the entire procurement process:
1. Mitigate Risk
There is always risk involved with the decision to conduct business with a third party, and contracts are a procurement team’s number one tool for minimizing that risk. By holding both sides accountable for the agreed-upon terms and by defining liability and indemnity, contracts can protect businesses from unfavorable business deals. However, a sloppy contract management process can often have the opposite result.
ContractSafe can help procurement streamline contracts, which can significantly reduce mistakes and errors. By enabling cross-department collaboration, legal, finance, and management teams can align on the terms of an agreement while simultaneously preventing unauthorized access through assigned user roles and permission settings. It also can safely secure contracts through document encryption and data back-ups, so that you protect your confidential documents.
2. Increase Operational Efficiency
The average company’s contract lifecycle is 30 days, and it’s likely much longer for companies that do not use a good contract management platform. Tracking multiple contract drafts, storing and retrieving documents, and staying ahead of expiration dates can be incredibly time consuming when done manually. Without an adequate process or software, procurement teams can spend significant time on manual contract management tasks and less time sourcing the best goods and services for the business.
With contract platforms, procurement teams don't have to spend their time working as contract librarians. ContractSafe offers a centralized contract repository that can be accessed from any location. Effective search and filtering capabilities makes finding documents and running reports a breeze, and Optical Character Recognition (OCR) makes it easy to search scanned documents for specific phrases or dates. ContractSafe can also fit seamlessly into your contract lifecycle ecosystem through easy integrations with third party platforms including SalesForce and DocuSign.
3. Reduce Costs
When you consider the number of hours and full time employees it takes to execute a contract, you can quickly see how expensive the process can become. Properly managing the contract lifecycle can reduce costs in a number of ways. First, by automating much of the process, you can reduce overhead and free your employees to spend time on more meaningful, productive work. At the same time, you can increase the speed in which contracts move through your organization, which can result in faster delivery of products and services that your business needs to function. A properly managed lifecycle might also save you from missing auto renewing agreements with unfavorable terms.
ContractSafe’s proprietary [AI]ssistant makes the process of creating, searching, and organizing contracts a breeze, and eliminates busy work so procurement teams can focus on tasks that drive meaningful results. It also has customizable dashboards so leadership teams can quickly obtain a high degree of visibility into lifecycle costs or any other relevant contract details.
4. Secures Confidential Information
Contracts for goods and services are confidential and should only be viewed by eligible employees. Unauthorized access to a confidential contract, either from an internal or external party, can be breach of contract in and of itself. As a result, it’s important that procurement teams take necessary measures to safeguard documents from unwanted internal and external access.
Companies with good contract management software don’t have to worry about security. ContractSafe’s user roles and permission features allow companies to determine who can access or edit a document. Additionally, full data encryption (both at rest and in transit) as well as secure servers hosted in Amazon Web Services' secure data centers can give you peace of mind. ContractSafe also implements many security best practices including penetration testing and vulnerability scans, to keep contracts safe from hackers and malware. In addition, ContractSafe has an annual SOC2 audit to ensure security practices are current and being followed.
Procurement teams are tasked with supporting company operations with the purchase of goods and services while simultaneously managing costs. However, procurement teams can only move as fast as their tools will allow. If your contracting teams are relying on manual processes such as shared drives and spreadsheets, your business is likely unable to source the products and goods that it needs in a reasonable timeframe.
If you’re looking to improve procurement productivity through a well managed contract lifecycle, consider how ContractSafe can help your team and schedule a demo today.