Monitor and maximise the value of your contracts

You’ve found the right supplier, they’ve passed all your due diligence during the onboarding checks, they have proven themselves consistently throughout your sourcing process and you have awarded a contract which has been fairly negotiated and provides value for all parties – so far, so good.

However, there are a number of issues remaining. First of all, a contract is of little value if people in the business aren’t directed to use it. Too often we see organisations with well negotiated contracts locked away in Sharepoint, Dropbox, Excel or even physical filing cabinets, making them completely unsearchable for procurement and legal teams. Good contract management cannot be accomplished using Sharepoint or Dropbox, it takes more than that. Organisations who adopt these approaches only increase administrative burden, cause savings opportunities to go unrealised and open themselves up to compliance risks. On top of this, the lack of a clear process and alerts for monitoring key contract events exposes organisations to unwanted auto-renewals and missed termination dates, often facilitating huge financial losses.

The problem of a lack of visibility extends to the wider organisation where agreed contracts are not presented to users of purchase-to-pay at time of purchase, meaning potentially more maverick spend and lost savings opportunities.

Unlocking the value within your contracts

In our experience, the first step for a buying organisation to deal with these contract issues sounds so simple and yet so few organisations deal with it. To us, the most efficient way of doing this is to make all your contract data and physical documents visible in a single web-based contracts repository. For many organisations, simply knowing how many contracts they have, who those are with, what they are worth and the framework and terms of the agreement is an enormous leap forward itself. From this starting point, a first class contract management tool will make this information accessible, present it in dashboards and ensure it is used to improve negotiating positions, reduce risks of poor supplier performance and ultimately, empower organisations to make smarter decisions.

Organisations using contract management will reap the benefits of robust search functionality, and proactive renewal management by making use of automated alerts to safeguard against the possibility of missed review or renewal deadlines, and protecting the organisation from the risk of contracts with unfavourable terms or with out of favour suppliers rolling over.

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