Benefits of Contract Life Cycle Management

Benefits of Contract Life Cycle Management
The Siliconreview
12 August, 2020

Contract lifecycle management begins when someone requests a product or service. Ultimately, it ends when this is delivered and received. There are many reasons why an organisation should invest in contract lifecycle management. Firstly, it can help the company save money and be more efficient in its contract management process. Because the contracting process is automated, legal compliance is improved, which subsequently lowers legal liability. Contract lifecycle management also has the benefit of helping companies source products that are potentially cheaper and are better suited to the final outcome. Contract lifecycle management usually helps to improve delivery time and quality for customers as well.

Why the implementation of Contract Life Cycle Management should be prioritised

Just some of the positives that contract lifecycle management offers include better compliance and saving money, more efficient administration and lower labour time, and more time for the completion of important tasks. 

  • Compliance is an important element of many contracts. When contractual obligations haven’t been completed, the risk of litigation can increase.
  • Payment errors, poor compliance and missed opportunities from special terms are just a handful of ways that money can be wasted in contract management. Contract life cycle management allows better contract administration which helps avoid such issues
  • Proper contract lifecycle management enables organisations to fulfill and even exceed their client’s expectations, leading to repeat business.
  • Contract lifecycle management streamlines the process meaning that labour and time costs are significantly reduced, and admin can be completed quicker.
  • Contract managers can spend more time on tasks they are good at. More time can be invested in management-level activities, particularly developing great relationships with customers and suppliers.

Consequences of Not Using Contract Lifecycle Management

The negatives an organisation can suffer by not using contract lifecycle management include lost time and money, inefficient processes, lack of quality and organisation and a higher risk of errors, along with a more demanding workload.

  • Time and money saved throughout the negotiation phase can be lost, and it is more challenging to enforce supplier terms that were initially negotiated for.
  • The production schedule and project timeline may be inefficient or non-existent, meaning that the project is less likely to be delivered on time and to the right standards.
  • Poor organisation, plus more time required to search through contracts, notes, schedules, and information means time is wasted on meaningless activities, rather than important ones such as searching for new business or analysing data.
  • More errors result from inefficient processes and add to the overall workload. Ad hoc tools lack the functionality, visibility, reporting and compliance needed to maximise resources.

Contract Lifecycle Management Allows Companies to Avoid Common Problems

To begin with, each step of the contract lifecycle is assigned a timeline, and resources and workload for each team member can be clearly allocated. An audit trail is always visible with contract lifecycle management, and the rules and processes of the job in hand can easily be managed. Things like deliverables, compliance and performance can all easily be measured.

Contract life cycle management takes away some of the stress, providing more efficiency and productivity, and creates a more ordered process for each task. Better relationships can be built with clients, money can be saved, and the quality of the final delivery is usually better than a manual contracting system. Results are sustainable and measurable, while governance and accountability are improved. Contract lifecycle management also makes the entire process more transparent.

Why Companies Need to Make the Switch to Contract Lifecycle Management Today

Perhaps the most prominent reasons why businesses should switch to contract lifecycle management are the money and time savings that can be achieved. Products can be sourced cheaper, payment errors become less frequent, and labour costing becomes more accurate. The entire process becomes more efficient due to automation, schedules and timelines, search facilities and an overall more streamlined process. Legal compliance is better, thanks to built-in compliance tools, and due to an audit trail, everything can be tracked and measured transparently. The final result for managers and staff is less stress, and the ability to do important tasks like searching for new work or nurturing existing client relationships.