What is Enterprise Contract Management?
Enterprise contract lifecycle management is a centralised end-to-end contract management
solution that enables large businesses to manage their contract portfolio effectively and efficiently across every stage of the contract lifecycle. Establishing a central contract management hub, allows the involved individuals across the business to access and collaborate on a contract throughout its lifecycle.
Contracts are full of risk. That’s why when it comes to negotiating a contract, the involved parties will go back and forth to achieve the best set of terms for their parties. But for most businesses, once the contract has been signed, it's stored and isn’t seen again until something goes wrong.
This lack of comprehensive contractual knowledge due to poor contract management is far too common and results in many businesses facing financial penalties, such as overdue payment fees or fines. With a typical fortune 1000 company having 20,000 – 40,000 live contracts at any time, these fees can quickly turn into a significant cost.
Typically, enterprise contract management involves using enterprise contract management software
or contract lifecycle management (CLM) solutions. Enterprise contract management software is a centralised end-to-end solution that helps large businesses manage their contract portfolio effectively using automation across every stage of the contract lifecycle.
The Benefits of Enterprise Contract Management
Today, businesses are governed by contracts. They define how the business works and the larger the business gets, the more contracts it will have to manage.
Contracts present both opportunity and risk, but with 60-80% of all B2B (business-to-business) transactions requiring a written agreement, effective contract management is essential. Organised enterprise contract management minimises associated risk, maximises opportunities and increases financial rewards.
Enterprise contract management presents a range of benefits including:
Unlike smaller businesses, enterprises have multiple teams or stakeholders across numerous locations who will all need visibility into each contract throughout its lifecycle.
Enterprise contract management software creates a single, central location for all the business’ contracts. This central hub acts as the front door to legal for all stakeholders, improves collaboration between departments and enhances contract compliance.
Enterprise contracts are long, complex and take time to pass through each stage of the contract lifecycle. Enterprise contract management software automates much of the low-value, time-consuming work. It creates automated processes that provide a seamless and efficient workflow.
Missed renewal dates and deadlines cause revenue leakage and can prove costly to any business. A study found that on average, businesses lose up to 9% of revenue due to poor contract management. Enterprise contract management improves this and contract compliance by adding date reminders to ensure users never miss key milestones again.
Who Needs Enterprise Contract Management?
Enterprise contract management is for scaling businesses with multiple stakeholders and decision-makers. Typically, businesses should consider implementing enterprise contract management software when their current contractual process is slow, complex, and inadequate for the volume of contracts with which they are dealing. Or when the business requires a more collaborative approach to legal matters.
Contracts define how a business conducts its operations. Every task is carried out against a legal backdrop and the larger the business, the more live contracts it will have to manage. For many organisations, this isn’t simply affected by staff headcount but also the number of decision-makers. A large number of decision makers with no centralised contract management system results in a lack of transparency, financial losses and wasted staff resource.
Effective contract management requires regular and continuous collaboration at each stage of the contract lifecycle. Traditional, manual methods are inefficient at scale and are unable to meet the current expectations of growing businesses. Using manual methods in an enterprise organisation stalls the contract's path to revenue.
Enterprise contract management is suited for businesses that require multiple stakeholders to be involved during the negotiation period of a contract. Having a central vault with advanced search and sorting capabilities allows businesses to seamlessly collaborate on contracts.
Businesses operating in multiple countries and or those working with a satellite office system should look to have a central repository for their contracts. Combine geographical difficulties with working from home due to COVID-19, the need for collaboration has significantly accelerated.
Many legacy systems are unable to provide an effective platform for team collaboration and when it’s key to achieving good results, this often results in human error and delayed revenue.
Enterprise contract management software like Summize has the functionality to sort contracts by department, supplier, and region, and provides one singular tool for individuals globally to collaborate on, acting as a single source of truth.
Heavily Regulated Industries
Businesses in heavily regulated industries must follow strict local laws and regulations. Sectors such as financial, and pharma must follow strict enhanced guidelines and laws to remain fully compliant. When compliance is key, businesses that opt for manual contract management are faced with significant financial penalties and legal liabilities.
Enterprise contract management software allows large businesses to implement an effective risk management strategy by automating compliance efforts. Issuing notifications, reminders, and milestone alerts helps the organisation ensure full contract compliance.
Accelerate Your Contract Lifecycle
Contracts are complex documents. They often contain risks and clauses that can be unclear. Once the contract has passed the negotiation and signature stage, it still has many steps to pass before the contract is complete. Traditional contract management methods have proven themselves insufficient and lack the flexibility required for large businesses.
Summize Enterprise Contract Management integrates with your favourite Cloud solutions to complement rather than replace your existing ways of working. Accelerate your contract lifecycle by improving cross-functional collaboration, standardising contractual information, and automatically tracking actions. Our powerful data engine gives businesses access to better decision making and actionable insights, summarising risk, and potential cost savings.