As we move into mid-2015, it is clear that contract management needs are on the rise. Survey after survey from various analyst firms and consultancies tell us that contract management is a growing area of concern.
The main benefits often attributed to contract management are providing efficiency and speed to the contract process through automation. A recent PayStream Advisors study found that 62% of survey respondents noted faster negotiation cycles as the primary benefit of contract management software.
With regulatory oversight increasing across many industries – particularly those directly affected by healthcare reform, financial legislation, and environmental changes – the consequences of not adhering to the new regulations are increased risk and potential profit loss. Based on the current business environment, the long-term benefits of contract management may be more strongly rooted in the ability to manage risk and compliance than improving efficiency.
Today’s corporations no longer have the luxury of choosing to implement a compliance program, and therefore need the right checks and balances for managing their compliance requirements, which invariably includes contract management. In this regard, going back to the PayStream Advisors study, 41% of survey respondents noted managing compliance, with policies and regulatory guidelines, as the second highest benefit of contract management.
From a contract process perspective, managing compliance requires the ability to easily break down and audit how contract stakeholder demands are being addressed and contracts adhere to regulatory mandates. As the foundation of every business relationship and thereby every financial transaction, visibility into contracts and how they are administered is core to compliance management.
Consider the Sarbanes-Oxley Act of 2002 and the 2010 Dodd-Frank Act, laws that in view of the expansion of international trade and the complexities of varying compliance regulations both domestic and worldwide have pushed organizations to increase investment in risk assessment and oversight. Noted on the Sarbanes-Oxley Act website: “With other legislation and regulation we have seen far too often organizations leave compliance until the last few days, and subsequently suffer adverse consequences.”
Given the increased regulatory environment and intensifying focus on guidelines and enforcement, contract oversight has become essential. As a result, contract lifecycle management (CLM) solutions are typically employed to address the demands for demonstrating proper contract governance and auditability of process.
How is your organization managing contracts? What is your backup plan if you are unable to produce contracts or provide adequate evidence of meeting compliance? If you don’t have answers to these questions, you might want to look into a CLM solution. Contact us to find out how our SmartContracts® solutions can help with better visibility, workflow, and flexibility. Ultimately, we ensure that firms are prepared for managing the compliance requirements of today and those that lie ahead.
* Watch an on-demand webinar with IACCM to learn how to improve efficiency, reduce risk, and increase compliance with contract management workflow best practices.