Using Contract Management Software to Reduce Revenue Leakage

Using Contract Management Software to Reduce Revenue Leakage
by Charles Dimov

It goes without saying that increasing profits each year is an important goal for just about any company. But they can still experience a loss of annual revenue, albeit unintentional and completely unobserved.

This unfortunate outcome is called revenue leakage. And a big factor in this is a poor contract management system (CMS). Without an effective, automated solution such as this, general counsels and legal teams must generate and manage contracts manually. They must take the time to go through thousands of files, running the risk of missing deadlines and dates. That is assuming that the files are not misplaced – or lost – all together!

Nevertheless, the adoption and implementation of legal technology go a long way in reducing this kind of revenue leakage, specifically around the contract management process. Here is how an effective contract lifecycle management (CLM) system can help with that exactly.


Basically, revenue leakage is when businesses lose annual revenue without intending to do so – and without noticing that it is even happening.between 5-40% of the value of a contract is lost due to poor contract management

The Harvard Business Review estimates that anywhere between 5 and 40 percent of a contract’s value is lost due to poor contract management, specifically mistakes in manual contract review. When done with the human eye, the manual contract review is prone to error. It is a tedious task requiring a significant amount of attention to detail: important deadlines and auto-renewal dates, as well as keywords in a contract.

This is where legal tech, particularly in the form of a CLM, comes into play. By adopting a proper contract management solution like this, a company will see a significant improvement in workflow management. Simply put, it is a more organized way of working. It aids overall performance, allowing in-house teams to work on other tasks and professional services that have been left aside. It also helps to reduce risk – and revenue leakage, as a result.


As mentioned above, many businesses contract management processes are still manual. These usually take the form of simple storage solutions – think about all of those loose-paper or Excel files!

Those who choose not to make this investment believe that their current system is cost-effective. Yet for an average corporation, manual contracting – in the absence of a proper CMS – actually results in an annual revenue loss of 9.2 percent. On average it takes 92 minutes for contract review.

So it is only in a company’s best interest to find ways to avoid revenue leakage. And a good place to start is adopting an AI-powered, cloud-based CLM. Such legal technology gives contract managers the tools and resources that they need to reduce revenue leakage each year and increase profits in the long term.

Contact us at ContractPodAi today. And find out for yourself how you can avoid losing revenue through your own contract management.

Charles Dimov

 Charles Dimov
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