In an era where digital transformations are redefining business operations across sectors, the need for effective contract management is crucial. Contracts are the lifeblood of your business and their poor management will lead to increased risk, the potential for non-compliance and potentially serious consequences for your business.
If your business is at the start of its digital transformation journey it’s likely to have low levels of contract management maturity. This can be defined as:
- Using a combination of spreadsheets, Slack, drives and emails to manage contracts
- Difficulty tracking key contract dates and events due to fragmented storage
- High levels of contract administration including manual data entry.
The Growing Importance of Managing Contract Risk and Compliance
With rising business-to-business complexities, the potential risk that contracts could pose to your organisation has increased substantially. The need for managing contract risk extends beyond compliance to include mitigating potential financial, operational, and reputational risks.
A poor compliance strategy can be catastrophic, leading to legal complications and even hefty fines.
On the flip side, an effective contract risk and compliance management strategy can lead to enhanced operational efficiency, better decision-making, and increased revenue generation.
When it comes to managing contract risk, organisations must stay ahead of the curve. Those still using spreadsheets and manually tracking renewals are already too far behind.
What does a robust contract risk and compliance strategy involve?
The digital age has brought about new challenges and complexities that require a proactive approach. By implementing robust contract risk and compliance processes, your organisation can identify and address potential risks before they escalate.
One of the key aspects of contract risk management is understanding contractual obligations and ensuring compliance with them. This involves carefully reviewing and analysing the terms and conditions of contracts, identifying any potential risks or ambiguities, and taking appropriate measures to mitigate them.
Contract risk and compliance management also involve monitoring and tracking contract performance. By closely monitoring contract deliverables, your organisation can identify any deviations or non-compliance and take prompt corrective actions.
This not only helps in minimising potential risks but also ensures that your organisation is getting the expected value from the contracts.
To achieve any of the above, your business needs a strong foundation that’s built on contract visibility. If you don’t know where your contracts are, you don’t know where the risks are.
Contract risk and compliance management starts with visibility
Your organisation can leverage contract management software such as ContractNow to enhance its contract risk and compliance management efforts.
A key aspect of mastering contract risk and compliance lies in centralising contract data into a single location. When it comes to managing agreements, having a centralised contract repository is like having a treasure trove of valuable information at your fingertips.
Imagine a scenario where you need to review the terms and conditions of an agreement if you suspect a contract breach has occurred.
Without a centralised repository, you would have to spend hours searching through countless emails, file cabinets, and shared drives, hoping to find the right document. That’s before you’ve even spent time reading the terms and conditions.
But with a centralised repository within ContractNow, you can simply enter a few keywords - whether it’s the contract name or a particular clause - into the search bar and have the contract returned to you. Restore total visibility and build your management processes from there.
Managing Risk and Compliance with Automated Notifications
One of the key capabilities of contract management software is the automated notification system. This helps in managing compliance by alerting stakeholders about deadlines, renewals, or changes in contract terms before they become critical.
Set on top of the centralised repository, the automated notification system allows for timely identification and resolution of compliance and risk issues. When a critical event is approaching, the system sends out automated notifications to the relevant stakeholders, ensuring they are aware of the impending deadline or change.
Whether a contract is due for renewal, expiry or an SLA has been exceeded, these automated notifications drive timely action so the risk doesn’t need to escalate.
Automating compliance with an auditable history
Creating an auditable history of actions taken against your contracts is a powerful tool for maintaining compliance.
Knowing that all actions are automatically recorded with the contract management software - along with a time, date and name stamp - drives accountability and ownership throughout the business.
Such a record can also serve as an invaluable resource during audits to ensure everything is on track. It not only provides clarity and evidence of due diligence but also helps in pinpointing the exact areas where controls and processes may need to be improved.
Your organisation needs to employ a combination of a centralised repository, automated notifications and internal audits to stay ahead.
Employing a robust contract management system can help to streamline these processes, proactively providing real-time insights and alerts to manage risks and the potential for non-compliance.
If your business is ready to master its contract risk and compliance management, book a demo today.