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Can Contract Lifecycle Management Help Recession-Proof Your Business?
October 10, 2022
After a summer of disappointing macroeconomic trends and continued uncertainty about what recovery is going to look like, many businesses are looking at ways to minimize risk during this potentially long and disruptive time. Although there is not one answer to today’s economic uncertainty, modernizing and digitizing the contract process can be part of the solution. It also makes good business sense.
Contracts are the backbone of every organization. They define relationships with vendors, customers, partners and more. Poor contract management processes can expose a business to risk, and the contract lifecycle is a way to track the overall health and well-being of a company. Tools such as contract lifecycle management (CLM) software give companies a way to gain more control, agility and visibility into their business and business relationships, which are critical when mitigating the risks and challenges associated with an economic recession.
Recession Mitigator #1: Control
During economic uncertainty, making sure that business processes are operating as efficiently and effectively as possible is even more crucial than usual. Well-designed business processes can improve profits, and help ensure higher quality and better customer relationships. Poor business processes increase inefficiencies and risk, and can impact the quality of decisions made based on those processes. CLM software allows organizations to take control of contract processes in a way that helps to perfect them. One of the immediate benefits is that it centralizes all contracts, related documents and contract data in a secure, cloud-based repository. This immediately reduces the time it takes to search for all that data manually, as well as ensuring that only the right people can access and edit contracts.
Automated workflows, and clause and template libraries, also help streamline the negotiation process by reducing the time required to draft, collaborate and sign contracts, as well as ensuring that all internal and regulatory rules are followed. Organizations can leverage automation to control how and when every task and alert needs to happen, triggering workflows specific to contract terms, and alerting the appropriate personnel when someone goes outside of this process. Clause and template libraries also provide control over what legal language is used and when, ensuring that the language and specifications are always up to date.
Recession Mitigator #2: Visibility
Organizations cannot manage or fix what they cannot see. CLM software gives organizations complete visibility into all contract management processes, and into obligations and relationships with vendors and partners. The centralized, secure database can easily be searched for contract-related information such as stage or status, as well as key dates, line items, commitments, and so forth.
CLM’s greatest benefit to organizations looking to do more with less during uncertain times is its ability to leverage all the contract data that they already have to optimize their business processes. Teams can generate metrics about the contract process and risk exposure, and set benchmarks and track important KPIs demonstrating that the house is in order. These include the total value of all active contracts, the average number of days in a contract lifecycle, opportunities for improvement and many other metrics. By tracking KPIs in this way, organizations have instant access to actionable contract intelligence, and can find underperforming areas and additional cost-savings opportunities. They can ensure that they are in compliance with internal and external processes.
Recession Mitigator #3: Agility
CLM software gives organizations more visibility into the overall health of their businesses and supply chains, as well as clear and accurate data to quickly make prudent business decisions. This agility is key to surviving when times are tough, and can be a competitive differentiator when they aren’t. CLM software speeds up the entire contracting process from request to negotiation. Self-service contract requests and submissions capture everything negotiating parties need up front, and then convert those requests to contracts using merge fields and clause and template libraries. In addition, collaboration features allow all parties to redline, approve, and sign quickly and securely. By shortening the contract lifecycle, this software immediately adds value to the company, and frees up legal and contracting teams to work on higher-value activities.
CLM can also be integrated with other business systems, including enterprise resource planning (ERP) and contact relationship management (CRM) software. By sharing contract data bi-directionally between all existing tools, organizations can accelerate contract management tasks and operational processes.
Recession Mitigator or Common Sense?
Unfortunately, there is no crystal ball that can tell us with 100 percent certainty whether current economic trends will lead to a recession. There’s also no guarantee that any technology, CLM software or otherwise, can recession-proof a business. That said, a modern approach to contract management can help ease some of the burden organizations face through better business process controls and visibility, as well as real-time reporting. These benefits make good business sense regardless of the state of the economy.
By Dave Parks
Dave Parks manages Contract Logix’s overall marketing strategy and initiatives including product marketing, demand generation, digital, content and public relations. He has over two decades of strong product and content experience, having served in senior marketing roles with Progress, Ciena, Lucent and Cascade Communications and as an industry analyst with the Yankee Group. Dave is a passionate marketer who loves creating content that answers people’s questions and delivers his audience value.
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