Top 5 Reasons Why Your Organization Needs Contract Management Software

The business ecosystem is heavily dependent on multiple stakeholders or identified as vendors, partners, etc. It’s a challenge for an organization to scale and grow business without them. An effective collaboration with stakeholders has always been an inception of successful businesses. The collaboration needs to be managed with some principles that support business relationships and their ultimate goals. That is what a well-defined and well-articulated contract does. Contracts help capture the complete understanding both in words and spirit to legally bind both company and partners to define their obligations to each other.  

Index 

• What is a Contract?
• Key Elements of a Contract
• What is Contract Management?
• Challenges of Contract Management
• How to Automate Contract Management
• What are the benefits of Contract Management Software?
• Enhance your Contract Management System with Partner Portal

What is a Contract?

A contract is a legal agreement between two or more parties, that can be created in written or verbal form that includes specific and legal terms and conditions and defines their duties and obligations. The terms also define penalties and remedies in case of non-compliance without lawful justification.   

Key Elements of a Contract

A contract happens when there is an offer, an acceptance, or mutual consideration between two or more parties with some elements to be enforceable. Here are some of the key elements: 

Offer: In a contract, an offer defines a relevant issue that must be effectively communicated. The offer must provide the recipient with a clear opportunity to accept or reject the contract. 

Acceptance: It is an expression through words or deeds that both parties agree to the terms of the contract.  

Awareness: It gives proof that both parties understand and agree to the terms and conditions of the contract. 

Consideration: Consideration involves the exchange of something valuable for specific actions or inactions mentioned in the contract. Typically, this includes payment for goods or services received. The exchange distinguishes a contract from a gift, as it removes the voluntary aspect by requiring something valuable in return for the promise made. 

Capacity: It explains each party's legal ability to comprehend and consent to the terms they agree to.  

Legality: Legality proclaims that all contracts must comply with the laws of the relevant jurisdiction in which they are formed and executed. 

What is Contract Management?

Contract management is a process of creation, execution, and renewal of contracts. The process also analyzes the contracts to enhance operational and financial performance while reducing financial risk. The contract consists of negotiating terms and conditions that ensure compliance.  

In procurement, a contract is a document agreement between a company and vendors. Here, the company agrees to procure the products or services on a payment basis and protects the rights of either party. It defines the obligations of both parties, payment lists and terms, the mode of delivery, and other legal terms and conditions.  

Challenges with Contract Management

Organizations face challenges with traditional contracting processes that bring out the requirement of contract management software. Here are some of the challenges: 

• Managing contracts with spreadsheets and manual approval is time-consuming and expensive.  
• Complexity in managing multiple contracts simultaneously. 
• Lack of visibility or transparency on claims and service credits. 
• Limited resources to track and monitor contracting processes. 
• Chances of losing the document agreement. 

How to Automate Contract Management 

At present, the business landscape has evolved to a point where business models and corresponding regulations require more time and attention than ever.   

Managing the contracts with a manual process is undoubtedly time-consuming, and outrageous, and there is more chance of inaccuracy. Shifting towards digital documentation has also not proved very helpful for many organizations due to scattered contracting processes across multiple data silos. Hence, contract management software offers a single platform to access everything for contracting throughout the organizations.  

The software automates and streamlines the process and makes it easier to negotiate, sign, renew, and report. It enables the organization to manage contracts on a centralized platform. Hence, the first step to automate contract management is to find the right software that aligns with the organization’s needs.   Contract management software provides various features, such as contract drafting, template libraries, e-signature, contract renewal reminders, etc to the users. Its centralized storage allows for retrieval, review, and sharing of contract documents. Automating approval workflows expedites contract execution on time.  

What are the benefits of Contract Management Software?

With the increasing emphasis on compliance across business operations, contracts have become more dynamic and complex. So, Contract management software provides a modern solution for this scenario.  

Implementing contract management software helps an organization to manage multiple contracts effectively. The software can streamline the contracting process with its various features such as the ability to track, monitor, comply, and renew.  

Some of the benefits of contract management software are:  

• Enhance contract visibility: Unlike manual processes, contract management software provides a unified platform that centralizes the contract repository. Hence, all the contract templates and clauses are accessible to all authorized stakeholders at any time from anywhere. It also helps in maintaining accurate contract history for auditing and reduces manual errors. It makes sure that the organization and the stakeholders are using the latest clauses.  
• Risk reduction: Standardizing terms and conditions while doing business reduces the amount of maverick spending and supply risk, and increases spend leverage. Contract management software allows for greater effectiveness in managing organizational risk by spotting any risk quickly and dealing it with policy or regulation.  
• Minimize approval timing: Contract management software automates the contract process speeds up the reviewing process of the contracts and increases efficiency. It enables the user to scan all contracts very quickly, save time, and notify responsible parties via email to remind them about the next stage or define escalation procedures.  
• Renewal reminder: The software helps in improving renewal awareness of the contracts. It notifies the user about the expiry date and contract renewal suggestion. It also lets you configure alarms with default or custom settings as a recurrence.   
• Financial escalation: The software helps eliminate unplanned renewals of unnecessary contracts which are not required to be renewed anymore and reduces legal expenses. It also gives visibility to spending, which is essential to ensure the best value for the investment. 

Enhance your Contract Management System with Partner Portal

Partner Portal, a cloud-based vendor management system, enables the users to manage and automate their contract management system. Partner Portal offers contract templates, fasten approval workflows, enables users to negotiate contracts in real-time, eSignature functionality, renewal reminders and storage to keep contract history safely. It helps the users to manage and automate their contracts from end to end, all in one flexible and user-friendly platform.  

Partner Portal provides improved data and analytics to check critical milestones better. By eliminating manual processes and centralizing document repository, Partner Portal enables greater control over contract process and workflow efficiency.  

FAQs: 

What is contract management software? 

Contract management software is designed to manage and automate contracting processes that include creating, negotiating, contract renewal, and collecting data on business contracts.  

Why do we need contract management software? 

Contract management software has become an essential tool for businesses of all sizes. It makes the contracting process faster, easier to manage, more efficient, and less prone to errors.  

What is the main goal of contract management? 

Contract management helps organizations track the compliance and performance of their stakeholders. It results in building healthy relationships to enhance their business goal.