Contract management is performed generally badly across all industries. Have a read through the following comedy of contract management errors and see if you feel the pain.
The disconnect between accounts payable and your commercial managers can cause invoices to be paid prior to work being completed.
Ineffective customer contract management leads to an inability to properly renew and service customer contracts, lower revenues and poor relationships.
As staff members come and go, corporate knowledge must stay with the company. Hence the need for a central repository of contract information that will retain organizational knowledge.
Inability to find and enforce compliance to contracts terms, conditions, and deliverables will inevitably lead to loss of inherent value and wasted money. No matter how well a contract is negotiated, it must be then positively managed to ensure compliance to the contract.
If you manage your contracts using disparate systems then you cannot effectively communicate corporate policy across your organization. A central repository lets you report on group wide risks and commitments, thereby providing a platform on which to build proactive management and mitigation of these risks.
An inability to track and measure what you currently do means that you will be unable to show continuous improvement, because you have nothing ?concrete? to build on and no way to judge supplier effectiveness.
With inefficient and cumbersome processes there will be less time available to communicate directly during negotiations and contract delivery, and more time wasted trawling through spreadsheets.
10% of contracts are lost, never to be found. If you add the time spent looking to the time it takes you to find an agreement that you actually have, there are a lot of wasted hours that could be saved with a contract management system.
If you are not following automated processes for contract development and delivery then poorly negotiated contracts and non-compliance to committed terms and conditions can lead to costly litigation.
If you are unable to forecast renewal dates then you may be stuck in agreements that should already have been terminated. Contract management software systems can remind you as these dates approach, helping to prevent costly oversights and embarrassment.
Statistics tell us that double handling of information is a great way to introduce errors. A centralized contract repository can manage electronic workflow of approvals and documents without the need to leave the system.
Wasted time and lost productivity caused by inefficient contract filing systems can amount to millions of dollars wasted.
Organizations that cannot communicate efficiently and track chronologies, contract correspondence and performance data will find themselves at a tremendous competitive disadvantage when it comes time to negotiate, because they have no records of anything that was said or done.
Companies are beginning to realize that expenditure has as much impact on their bottom line as revenue. Bad purchasing techniques, long lead times, knowledge of contract terms, and access to information can have a large effect.
We all need to put in place efficient, system driven procedures to automate and expedite the sourcing process. This way we can enter into contracts more quickly and enjoy the benefits earlier.
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