How does Effective Contract Management Uplift Source-to-Pay Process and Connect Various Processes in the Organization?
Effective contract management can help legal teams identify and resolve potential issues or disputes with suppliers, which can help prevent disruptions to the supply chain. In addition, contract management can significantly impact accounts payable and vendor management functions, as it helps ensure that the organization is making payments to suppliers and vendors per the terms of the contracts.
Let us see how effective contract management connects each stage of the Source-to-Pay cycle and maximizes ROI (return on investment).
How can Contract Management help Legal Teams?
Legal teams can use contract management data insights to support their work. Some specific examples include:
- Identifying, tracking, and managing legal risks: By analyzing data on the terms and conditions of contracts, legal teams can identify potential legal risks and take steps to mitigate them. Likewise, by tracking the terms and conditions of contracts, finance teams can identify and mitigate potential risks. For example, if a contract has a large financial liability or a high level of risk, the finance team can work with the legal team to negotiate more favorable terms.
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- Negotiating favorable terms: By analyzing data on the terms and conditions of contracts, legal teams can identify opportunities for negotiation and work with finance teams to achieve more favorable terms.
Download: Contract Review & Negotiation Checklist for Services Vendor
- Supporting due diligence efforts: By tracking data on the terms and conditions of contracts, legal teams can support due diligence efforts related to mergers, acquisitions, and other business transactions.
- Enhancing overall compliance: By tracking data on the terms and conditions of contracts, legal teams can ensure that their organization complies with relevant laws, regulations, and policies.
- Managing contract disputes: By tracking data on the terms and conditions of contracts, legal teams can better understand the issues involved in contract disputes and develop strategies for resolving them.
How can Contract Management help Sourcing and Procurement teams?
Contract management can be a valuable tool for sourcing and procurement teams, as it involves tracking, negotiating, and executing contracts with vendors, partners, and customers. Some specific ways that contract management can help sourcing and procurement teams include:
- Identifying cost savings opportunities: By analyzing data on the terms and conditions of contracts, procurement teams can identify areas where they can negotiate better pricing or more favorable terms.
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- Streamlining the procurement process: By tracking data on the performance of contracts, procurement teams can identify inefficiencies or bottlenecks in the procurement process and take steps to address them.
- Enhancing supplier relationships: By tracking data on the performance of vendors and partners, procurement teams can identify which ones are meeting their obligations and which ones may be falling short. This can help inform decisions about which suppliers to work with in the future.
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- Improving forecasting: By tracking data on the terms and conditions of contracts, procurement teams can improve their ability to forecast demand for goods and services, which can help with budgeting and planning.
- Enhancing compliance: By tracking data on the terms and conditions of contracts, procurement teams can ensure that their organization complies with relevant laws, regulations, and policies.
Unlock the True Value of Contract with Compliance Management. Learn More
How can Contract Management help Finance & Accounts Payable teams?
When pre-integrated with your AP (Accounts Payable) automation solution, a contract management system can provide accounts payable teams with valuable data insights that can help them improve efficiency, reduce risk, and make more informed decisions. Examples include:
- Payment terms: The CLM (Contract Lifecycle Management) solution, when pre-integrated with your AP automation solution, can track the payment terms for each contract, helping accounts payable teams ensure that payments are made on time and avoiding late fees or penalties.
- Invoice tracking: The system can track invoices associated with each contract, helping accounts payable teams ensure that all invoices are received and processed on time.
- Spend analysis: The system can provide insights into an organization’s spending patterns, helping accounts payable teams identify opportunities for cost savings.
- Supplier performance: The system can track supplier performance, including delivery times and quality of goods or services, helping accounts payable teams make informed decisions about which suppliers to continue working with.
- Contract expiration: The system can alert accounts payable teams when contracts are approaching expiry/renewal dates, helping them plan for contract renewals or negotiations and related payment processing.
- Negotiation support: Contract management can provide finance teams with the data and insights they need to negotiate more favorable terms in future contracts. This can include information on industry benchmarks, past performance, and the company’s negotiating position.
- Risk management: By tracking the terms and conditions of contracts, finance teams can identify and mitigate potential risks. For example, if a contract has a large financial liability or a high level of risk, the finance team can work with the legal team to negotiate more favorable terms.
- Contract compliance: Finance teams can use contract management to ensure the company complies with the terms and conditions of its contracts. This can help avoid costly disputes and legal issues.
- Improving forecasting: By tracking data on the terms and conditions of contracts, finance teams can improve their ability to forecast revenue and expenses, which can help with budgeting and planning.
What’s Next
Are you ready to say goodbye to silos with connected contract management? Do you need help figuring out where to start? Then, take the first tiny step towards your connected contract excellence journey by registering for this upcoming webinar: The Connected Contract Management Experience: Maximizing Outcomes Across The Enterprise
