At the heart of every modern organization is the need to transform at speed and position their business to survive. It includes managing business requirements within a regulated framework for business continuity.
Every company, big or small, executes agreements for their business offerings and performance benchmarks. It involves formal contracts to ensure the agreements are binding upon both parties and there is no risk of violation of any terms. Modern tech-driven companies are thus safeguarding their business interests and brand image with a formal contract management system (CMS) that automates the entire contract lifecycle.
The need for CMS in an enterprise environment
Any contract begins with informal or verbal negotiation and moves on to the eventual signatures by authorized signatories and representative law firms. The legal process also includes various clauses that state how the final products or services are delivered.
But can manual processes ensure error-free and timely compliance binding on all parties? No. Traditional ways of contract management are riddled with risks of misinterpretation or non-execution of contractual terms, potentially leading to business loss, or rendering some of the terms null and void.
However, automated rule-based contract management software is error-free, with an automatic trigger of legal terms based on dates, task completion, and compliance norms, throughout the contract lifecycle management system. A contract management system thus streamlines the complete contract lifecycle with integrated software that handles contract actions.
The 10 Key Benefits of an Integrated Contract Management System
The contract management system digitizes, stores, and categorizes all contracts in a central repository for access by stakeholders such as legal team members, compliance teams and the management. Besides, it eliminates the need to file contracts manually and saves time. Any potential damage or theft of critical files or loss from misplacement and issues like fire are the other advantages of a contract management system.
Here we go with some of the benefits of an enterprise contract lifecycle management system:
1. A one-stop Contract lifecycle management system
Companies can take advantage of a centralized repository that stores and manages all legal documents, for a single point of access. A one-stop point of document storage facilitates transparency and accountability for better controls.
The centralized searchable system helps to locate contracts faster and more efficiently based on predefined metadata and text search.
2. Centralized contract classification and extraction
A centralized repository reaps the benefits of utilizing a contract management system: risk mitigation with AI-driven contract data digitization and extraction, a uniform mechanism of categorizing legal documents, defining, and comparing documents for seamless and collaborative arbitration, trackable audit flows and more.
A single streamlined contract management system offers the benefits of a contract management system, ultimately helping to close deals faster and flawlessly.
Much of enterprise data today is in the cloud. The cloud contract management system is a part of the CMS, facilitating teamwork and location-agnostic business decisions. The cloud-based CMS is a critical element of a global business ecosystem, where deals are made, and contracts negotiated across different locations.
3. Configurable workflow and templates
Other benefits of utilizing a contract management system are built-in workflows across the contract lifecycle for streamlining the process of contract creation, approval, execution, and termination, foolproofing businesses with safeguards in various eventualities.
Templates based on the various contract types and dates provide timely alerts and notifications before contract expiry. It makes renewals and YOY rollover a seamless and automated process allowing businesses to renegotiate or cancel an agreement and avert deadlocks in unfavorable settings.
4. Minimizes errors and losses
The contract management system benefits a business by optimizing the entire legal process. Drafting of legal documents is uniform and relatively free of errors because of an in-build clause library with terms that sync with contract templates for approvals and flexibility in document management.
5. Security from cyber-attacks and data breaches
The contract management system features are stored within centralized and secure servers, often encrypted, and enabled with access controls. So, unauthorized individuals cannot access critical business legal documents. The centralized enterprise contract management system also has access controls that ensure visibility across every point of the legal lifecycle for transparency.
6. Maximum safety of legal documents
Another contract management system benefit is the digitization and end-to-end hyper automation across the contractual life cycle, as it means everything has a digital backup. Thus, losses that may accrue from floods or fires in the case of physical contracts are averted, as well as from malicious acts when employees leave. CMSs safeguard business interests and the likelihood of large payouts in the face of mass resignations or layoffs.
7. Streamlining departmental business processes
Contract management systems also track supplier-based data, integrating with other departments for end-to-end visibility of contracts, thus allowing amendments of subcontracts, timelines, prices, etc. The CMS enables automated performance analysis against contractual terms to beef up the operational and financial performance of various departments against contractual benchmarks.
8. Identifying and mitigating financial and reputational risk
Regulatory compliance with the contract terms against the financial and legal regulator of the region is a critical requirement of every business. The enterprise contract management system addresses this issue by devising a suitable business continuity plan within the CMS compliance mechanism, thus mitigating any financial and reputational risk from non-compliance with the legal framework.
9. Automated reports generation
The contract management system benefits from streamlining the entire legal and contractual process and helps generate granular and instant reports for monitoring KPIs against contract summary reports. Thus, a key advantage of a contract management system is its intelligent and automated reporting for timely actions.
10. More efficient CRM
Intelligent contract management solutions leverage customer relationship management (CRM) for a client-focused and holistic approach to customer relationships. Contracts are leveraged and enforced seamlessly with timely and automated notifications for efficient CRM.
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