7 Industries That Need to Implement Effective Contract Management in 2022
In 2022, contract management plays an important role in business operations. Not only are contracts involved in almost every interaction, but their success also contributes to your company’s success. The majority of organizations that deal with numerous agreements regularly can benefit from an effective handling process. However, it can impact certain industries more significantly than others.
The crucial role of contract management in 2022
Contracts are essential for every company yet, are becoming increasingly difficult to manage because many businesses are forced to handle a large number of agreements with varying complexity at any given time. On top of that, many organizations are still operating remotely, making manual management processes impractical today. A robust contract management software overcomes these bottlenecks, allowing businesses to flourish during the post-pandemic era.
What is effective contract management?
An effective contracting process is crucial for the growth of modern businesses. However, many companies struggle to find a way to optimize their contract lifecycles, causing slow deal closures, reputational damage, stunted business growth, decreased productivity, a low ROI, etc. All of these issues and more can be fixed with one simple solution- contract lifecycle management software.
Here is what an optimized CLM process using automated tools looks like:
- All contracts are stored in a secure and centralized repository
- Deadlines and milestones are automatically tracked
- Insight into KPIs and other contract data such as compliance
- Effective collaboration and negotiation
- Remote eSignatures
- Post-approval agreement monitoring
The 7 industries that need an effective contract management strategy to grow in 2022
Healthcare providers handle many contracts daily, from patient care forms and employment contracts to supplier deals and lease agreements. Plus, these companies also have to manage many strict regulations governing the healthcare industry, such as HIPAA, the Anti-Kickback Statute, and the Stark Law. It’s best for healthcare organizations to ensure that they are complying with these guidelines; otherwise, there are hefty fines and penalties.
A healthcare contract management system can help organizations with things like:
- Payer and provider agreements
- Contract security
- Managing important dates and deadlines
- Employment contracts
- Compliance monitoring
2. Procurement Teams and Departments
Streamlining operations to maximize productivity is essential to remain competitive in the supply chain. But, effectively managing the complex nature of this industry often requires a lot of dedication and resources. One of the best ways to cut costs and improve efficiency in procurement is by implementing CMS. The software allows these companies to track the lifecycle of a contract while managing its risk and compliance to reduce costs while improving overhead.
Advantages of contract management in procurement:
- Manage the progression of projects
- Access documents across timezones and locations
- Effectively manage risk and compliance
- Remotely negotiate with counterparties
City, county, state, and federal government agencies deal with increasing regulations, freedom of information inquiries, and unique vendor and procurement management challenges. Every government sector must find an innovative and cost-effective way to increase openness, transparency, and accountability for records, documents, and public agreements.
This means that agencies need a way to manage agreements that allows for oversight and transparency of their entire repository. Even smaller-scale sectors that don’t deal with as many legal documents on a day-to-day basis can benefit from a local government contract management solution.
Government agencies need an effective contract management platform to:
- Boost security of confidential documents
- Manage public and private contracts from one cloud-based location
- Ensure adherence to rules and regulations surrounding disclosure
- Assign roles to different departments and establish a workflow
- Easily approve agreements using eSignatures
4. Oil and Gas
For oil and gas companies, non-compliance issues often come with fines worth millions of dollars. This severely affects the company’s bottom line in a sector where time and costs are vital for growth. For this reason, oil and gas companies need an innovative management system that effectively reduces risk while ensuring adherence to the industry’s rules and regulations.
Oil and gas contract management solutions give you the ability to reduce risks and ensure compliance while also:
- Increasing visibility into contract terms and obligations
- Managing workforce payments, global price differences, and project deliverables
- Leveraging pre-approved template libraries to draft error-free contracts with project partners and public authorities
- Implementing a data and analytics-driven system to boost accountability and transparency
- Maintain audit trails to meet government agency recordkeeping requirements
5. Sales Teams and Departments
Quicker sales cycles allow sales teams to dedicate more time to closing bigger deals, opening up the door for the business to meet its revenue goals. However, the efficiency of the business’s CLM process directly affects sales cycle times and, thus, profits. Sales cycles are often bottlenecked because the department is expected to manage contracts while also prioritizing sales-related tasks. This forces teams to juggle multiple systems and clients without a way to manage them effectively.
Contract management for sales teams helps eliminate bottlenecks by:
- Speeding up contract authoring by integrating customizable templates
- Improving communication and transparency so sales teams can collaborate efficiently during every contracting stage
- Providing a single platform to complete all tasks, including performance monitoring
- Reducing legal dependencies through an intuitive technology-driven platform
- Maintaining audit trails to help improve compliance with industry standards and government regulations
Construction companies often miss deadlines and go over budget because it’s difficult to predict how long a project will take and how much it will cost. However, this issue partially stems from the complexity of agreements and the lack of contract management in the construction industry.
Commercial construction businesses typically deal with hundreds of active agreements at any time, making manual management nearly impossible. The process of automating construction contract management boosts visibility and helps diminish the chance of missing deadlines and spending too much.
CMS is beneficial for construction for the following reasons:
- Track deadlines via a notification system
- Manage the cost of the agreements in your portfolio
- Gain oversight of contract performance
- Keep every document in one secure location
Today, insurance providers are faced with the challenges of reducing client costs while maintaining compliance with various government regulations. Insurance companies must maintain records of pricing metrics, archived records, and documentation of every account in their system. Managing and keeping track of these various documents is time-consuming when they’re scattered across multiple locations.
An insurance contract management system allows providers to:
- Store every contract and related document in one secure location
- Find key clauses and agreements with different stakeholders through search capabilities
- Manage the costs of contracts through improved transparency and performance reports
- Keep track of the compliance of every agreement to avoid penalties
Why the majority of today’s businesses can benefit from CLM automation
Today’s market is cutthroat, as many businesses are utilizing technology-driven automated processes to streamline their operations. CMS is one of the most significant business solutions to come out of the digital era. Contracts play a central role in the business world, with a majority of organizations dealing with numerous agreements regularly. This is why an effective contract management strategy is imperative for every company in 2022.