Contracts are a necessity when coming to agreeable terms with others, especially in business-related matters. It is the foundation for relationships since the parties of the contract will be legally written down containing rules and regulations that need to be met in order for them to benefit from each other. With the help of a contract management software, businesses are able to flourish by assisting one another in a series of promises in goods, services, and money within a certain time frame.
So what is a Contract Management Software? It is a computer software that fully automates the existing Contract Management system of the company completely migrating all contract data to a digital version.
Despite the existence of these contracts for the sake of agreement and entering a pledge, these are sometimes broken which leads to multiple lawsuit charges filed. This usually happens when one of the parties’ services are unable to meet expectations or deadlines that were stated on the contract. Having this kind of issue is both inevitable and a hassle experience that you would really want to try and avoid.
These are one of the reasons why people depend on having a contract management system since it helps save them from the possible trouble that could be caused by getting help in managing and keeping track of the contracts that they committed to. There are multiple factors as to why contract management is beneficial to a person owning or managing a business which includes:
Tracking Revenue Expenses
According to a study by The International Association for Contract and Commercial Management, the result of having bad contract management leads to an average loss of 9% business cost due to mismanagement. Aside from maintaining compliance and making sure that all ends are met, taking note of the financial value is also of big importance. A Contract Management System allows you to get an accurate statistic on the rate of return investment based on the contract. Financial value increases since contract managers are able to get the most out of the deal.
Having a properly written contract will guarantee the contract holder to receive their share of services from the other party at a specific time consistently. For example, big productions could promise small payments per month until the end of the project. Book authors could get advanced payments before the submission of the manuscript. A good contract manager will get you the best deals while keeping money, time, and risks in mind as they do so. It is important that you keep track of all of your assets so that you know just how much you’re making and how much you can set aside for investments.
Ensures Completion of Obligations
One of the main reasons why breaches in contracts happen is because there is a failure to meet the promised requirements. Payment is not given on time and issues may not seem too big, to begin with, but over time fingers start being pointed in trying to determine the source of incompetence. The contract management system must be in charge of having checks and balances that are foolproof in order to avoid any “intentional” breach of contract. It is their job to do a background check on the other party and see that their company meets specific qualifications before committing to a binding contract with them.
By breaking or having inconsistent partners, your business could be in danger of losing money since there are deadlines that are failed to meet and services that are not delivered as promised. You may even lose clients since they are sick of delays. This is why contract management helps in creating agreements that specific and free of risks in order to avoid these kinds of problems from occurring due to incompetent partners.
Protection of Parties
By having agreements put into writing, objectives will be met much more responsibly and efficiently. Simply the presence of a contract will make the contract holders more pressured to live up to their promises of delivering their services to one another on time. Contract management systems also make sure that these are being met correctly and on time. The full scope is also identified specifically in order for everyone to be aware of what they have to do and the deadline that they need to meet.
If in any case this contract is not taken seriously which results to failure in fulfilling the promises made by the contract holder, the other party has the right to file charges against them and take legal action. This goes the same for poor performance or inconsistency in delivery. One must also hold this contract even years after it has closed if in any case, another issue arises once again.
