As companies grow, their contract management process becomes increasingly complex and time-consuming. What used to be a few simple agreements now involves multiple stakeholders, negotiations, and legal considerations. This process can be daunting and stressful for even the most experienced business owners. As part of the new levers and controls a scaling company should be put at the forefront of its strategic planning – CLM digitalization should be at the top.
The adoption of automation has been steadily increasing for several years, but in recent years, businesses have been reconsidering the role of automation. Previously, cost reduction and performance improvement were the primary drivers of automation. However, since the past few years, companies have been turning to automation to enhance their business resilience, accelerate development and deployment cycles, mitigate risk, and make faster and better-informed decisions.
This shift has also led multiple midsized companies to prioritize digital transformation. In this blog, we will highlight some of the pain points a scaling company may face in their contract management landscape, and how CLM digitalization on this front can help on the path towards rapid expansion.
The Contract Crunch: A Growing Company’s Contract Management Woes
Imagine the CEO of a startup having to negotiate and review contracts on top of managing day-to-day operations, dealing with investor relations, and building a brand. The added workload can lead to important details being overlooked, potential liabilities being missed, and ultimately affecting the company’s reputation and bottom line.
Here are just a few of the concerns that may plague a growing company’s contracts as business starts to expand:
Unmanageable volumes:
A key challenge that growing companies face is managing the sheer volume of contracts. As businesses scale up, they may have hundreds or even thousands of contracts to manage. Keeping track of all these agreements, especially those with varying terms and conditions, can be a Herculean task. Businesses need a scalable solution that can grow with them, providing an efficient and reliable method of managing all their contracts in one place.
Lack of visibility:
Managing contracts manually can lead to a lack of visibility into contract terms, obligations, and performance. Not having all contracts in the same place, especially with growing volumes, means important data and metrics can be missed. With an automated system, all the contract data can be stored in one centralized location, making it easier to track and monitor the status of contracts.
Inconsistent contract formats:
As a company grows, it starts dealing with more vendors, suppliers, and partners. This results in contracts of various formats, making it difficult to manage them in a systematic way. Automating contract management can help streamline this process by ensuring that all contracts are templatized, in a uniform format, making it easier to access and manage them.
Manual processes:
A manual contract management process that once worked for a smaller company can quickly become overwhelming for a growing one. Manual processes are often error-prone and time-consuming, resulting in unnecessary delays and inefficiencies. And these delays and errors from manual contracting can expose a company to risks of non-compliance, potential liabilities being missed, and costly gaps in agreements.
Missed deadlines:
As the number of contracts increases, it becomes difficult to keep track of deadlines for renewal, termination, or renegotiation. This can translate into significant leakage in value from contracts. An automated contract management system can send timely alerts and notifications to ensure that important dates are not missed.
Expanding footprint:
Finally, as companies expand, they often need to collaborate with suppliers, partners, and customers across different regions and time zones. This can result in a further complication of contract management, including difficulties in negotiating contracts and tracking performance, ultimately affecting the company’s reputation and bottom line.
Turning a New Page: New Levers for Growth and Efficiency
Higher Efficiency:
One of the key benefits of contract management automation software is improved efficiency. When managing contracts manually, it’s easy to get bogged down in administrative tasks, leading to wasted time and resources. Automation can help reduce the administrative burden by automating routine tasks, such as data entry and approvals, and freeing up staff to focus on more important tasks. By streamlining workflows, businesses can reduce manual errors, minimize delays, and boost productivity. Not only can this help streamline end-to-end contract management workflows, but it can also free up time for strategic initiatives – thus making the contract management landscape more efficient.
Stronger Compliance:
Another advantage of contract management automation is improved compliance. With increasing regulatory requirements, companies need to ensure that they are meeting all relevant regulations and standards. This is especially true for companies on an upward trajectory who are venturing into new territories. Failing to have compliant contracts can result in significant legal and financial consequences – which are especially harmful to a scaling enterprise. With contract management (CLM) digitalization companies can take the guesswork out of compliance. Risk management tools and sophisticated analytics provided in CLM software can help legal teams keep track of regulatory changes, update their contracts accordingly, and ensure that they are always compliant.
Better Insights:
Finally, contract management automation can provide better insights into contract performance, enabling businesses to identify areas for improvement and make data-driven decisions. By analyzing contract data, companies can ensure that all their suppliers are providing them with value for money, all contracts are delivered as promised, and existing contracts are negotiated on the best possible terms to realize value. The advanced analytics offered by best-in-class CLM digitalization tools can thus ultimately lead to increased revenue, reduced costs, and improved customer satisfaction.
If you would like to support your growing business’s needs with a leading Contract Lifecycle Management Solution, set up a call with Zycus’ solution experts to understand exactly how you stand to benefit, and what are the CLM features you can wield to start optimizing your contracts today.
Best Practices for Implementing an Automated Contract Management System
Implementing an automated contract management system can be a complex process but following a few best practices can help ensure a smooth transition.
First and foremost, choosing the right software and vendor is critical. Look for a solution that meets your company’s specific needs and offers the features and functionalities required for your industry. It’s also important to plan for integration with existing systems to ensure that the new system works seamlessly with other tools in your tech stack.
Defining workflows and roles is also a key step in successful implementation. Clearly defining responsibilities and processes can help eliminate confusion and ensure that everyone is on the same page. This step also provides an opportunity to identify areas for improvement and optimize workflows for maximum efficiency. Additionally, establishing data governance policies is essential to protect sensitive information and ensure compliance with relevant regulations.
Ultimately, the success of an automated contract management system depends on careful planning, effective communication, and a willingness to adapt and optimize processes as needed. With the right approach, companies can reap the benefits of contract management automation and take their business to the next level.
Conclusion
Contract management automation is a game-changer for growing companies. By streamlining workflows, reducing errors, and freeing up time for strategic initiatives, companies can accelerate their expansion while ensuring regulatory compliance and reducing risk exposure. With greater insights into contract performance, companies can also identify areas for improvement and make better-informed decisions. The benefits of CLM digitalization are clear, and it’s time for companies to consider implementing a system that will help them scale their businesses efficiently and effectively.
