We can’t stress enough the importance of contracts in an organization. They are literally the building blocks of every deal, containing crucial information regarding stakeholders, clients, employees, and many more. Studies have time and again proved that a poor contract management system can end up costing 9% of the annual revenue of the companies. In fact, for Fortune 500 companies, this loss is valued at over $2.5 trillion. Yes, the number is that high.

On the other hand, a well-managed contract management system can help ventures save up to 30-50% on operational costs. Not to mention, contracts also help in building long-term and sound relationships with contractors/suppliers/shareholders/clients, ensuring superior project execution.

However, the contract management system works best only if it is integrated with reliable strategies and is well-managed. Improving the contract management system can further help make business owners make lasting and impactful changes to their ventures.

But is that so easy? Ensuring an effective and efficient contract management system can be a complex and challenging task. But worry no more. Here we are, with some reliable strategies that can help you unlock and maximize the value of your contract management system.

Let’s get started!

  • Focus on building accountability

As mentioned earlier, contracts are drafted to manage business relationships and cross-department lines. Their prime focus is to help ventures meet their potential economic, ethical, and global realization standards. That’s the sole reason why you need to ensure accountability for all your individual, departmental, and other organizational contracts.

And this can be done by:

  • Ensuring legal compliance: Drafting contracts as per the state laws helps in building a foundation for long-standing business relationships and protects the interests of all the involved parties.
  • Support collaboration with transparency: Another way to ensure accountability in contracts is to enrich them with necessary clauses. Furthermore, it helps with transparency throughout the system, ensuring that all the parties are on the same page.
  • Establish uniformity: You can also foster accountability in your contracts by integrating and enforcing concise and standardized contracting policies and templates.

Pay attention to performance analysis

Know that contract value solely depends upon contract performance. That’s why ventures often go out of their way to keep a pulse on the performance of their organizational contracts.

And you can do this by:

  • Monitoring cost analysis: The first step of performance analysis in contract management is to analyze the fluctuations in the cost. Once you are done with that look for potential opportunities that can help you reduce overhead costs.
  • Analyze the supply chain management: The next step is to take a quick look at how the vendors are performing. See if there are any pending policies/laws that need amendment.
  • Integrate the latest tech solutions

Did you know that many organizations still rely on spreadsheets, emails, and shared databases to keep track of their contract lifecycle management process? This technological gap can lead to longer/inefficient contract cycles, increased risks, regulatory challenges, compliance issues, and worse of all, missed opportunities. You wouldn’t want that. Right?

Thus, in order to prevent contract value erosion, make sure you consider integrating the latest tech solutions in your contract management system. This, in turn, will help you automate your contracts and optimize contract economics. The latest tech solutions can also help in extracting relevant information from the contracts, helping you save a lot of your precious time.

  • Adherence to risk management plans

You’ll be surprised to know that not having a proper risk management plan is one of the prevalent causes that promote contract value erosion. Therefore, one of the surefire ways to unlock and maximize the value of your contract is to foresee potential risks and make plans to prevent them.

Unlock and Maximize Value of Your Contract Management System With Aeren LPO

Here, at Aeren LPO, we understand that contract value creation is one of the biggest challenges faced by the ventures, especially in such competitive business environments. That’s why we have a full-fledged team with years of experience and knowledge that offers end-to-end contract management services. Our tailored contract management solutions ensure better business relationships, cost reduction, and reduced turnaround time.

Thus, if you are also struggling with finding ways to unlock and maximize value in your contract management system, contacting us TODAY can be an advantageous decision for your venture. So, visit our website and let our experts handle the rest.