How a Smart Contract Management System Reduces Your Costs
Smart contract tools are an investment that will pay for themselves over time. The best contract management systems help companies reduce costly errors made in agreements.
The Profitability of an Electronic Contract Management System
Using modern technology can help you boost cost savings by reducing errors, speeding up contract cycles, and providing useful data, which is why it is profitable to invest in a smart contract management system.
Reasons for loss of money due to contract-related issues
According to IACCM, the average business loses over 9% of its revenue because of contract-related issues. When attempting to draft agreements without a contract management system, it’s easy to glance over errors that will affect the contract’s overall validity. If mistakes are left unamended, your business will face unnecessary costs and fees.
Common contract-related issues
Common contract-related issues that lead to lost revenue include:
- Drafting unclear and ambiguous provisions
- Not including all necessary terms
- Copying contacts found online
- Leaving parts of the verbal agreement out of the written contract
- Missing deadlines
- Not fixing typos in the draft
What are some costly mistakes that are made when drawing up the conclusion of a contract?
The conclusion is arguably the most critical aspect of a written agreement. A contract is typically concluded by the other party accepting the order to execution, proven with a signature. Mistakes such as an unclear conclusion, not having a valid signature, or leaving out contract terms are a common source of costs when closing a deal.
Both businesses should be cautious when entering an agreement. You can save money by taking the time to ensure that all parties understand and agree with the terms. If you leave aspects undecided and unclear when closing a deal, you may lose the opportunity for future agreements or even face a lawsuit for breaching the contract.
Six ways that a smart contract management system can reduce costs
Many contract management systems include a contract risk management feature intended to help reduce costs. The feature minimizes potential monetary losses by efficiently managing and controlling contract risks.
This feature is beneficial for companies looking to save money because risky agreements can produce unnecessary losses.
One of the helpful smart contract tools is the ability to manage your team automatically. The allocation opportunity allows you to assign various agreement tasks to different colleagues. Also, your team can collaborate on the same document simultaneously, limiting the costs associated with wasting time combining various contract versions.
Driving value from data and insights
An electronic contract management system will gather data and insights from the documents on its smart contract repository. You can then analyze the data to determine what stages cost your company the most time and money. Using software to manage agreements will fix costly problem areas and improve the overall contract flow.
Standardization and template use
Standardization saves money and resources because you can reuse contract templates for similar agreements rather than starting over for each one. Template features on contract management systems often include the benefit of auto-filling, which is far more efficient than manually entering redundant information each time you draft a new agreement.
Never miss deadlines
Alarm and notification features of management systems help reduce the fees and delays caused by missed deadlines. You can even customize the notification to your preferences or use the system default settings. By being notified and archiving contracts when they expire, you can increase renewal awareness rather than spending money on drafting new agreements.
Shorten approval time
Smart systems give you the option to create a dynamic workflow to-do list. That way, you can efficiently analyze all pending agreement forms and better understand what stage they’re in.
Smart workflow management leads to shorter approval time, limiting wasted resources and costs caused by prolonged deal closures.
Why is investing in a smart contract management system profitable?
A contract management system is a cost that will quickly pay for itself and reduce your company’s loss margin. Businesses that utilize the best contract management systems also see an increase in revenue. Smart management ensures deals are closed faster, better terms are negotiated, and data analysis can reduce bottlenecks in the contract cycle.
Smart contract management is the future of business, and many companies are already aware of its profitability. Investing in smart contract tools will help your business rise above competitors who are still wasting time managing their agreements manually.