The Startling Cost of Mismanaged Contracts
Regardless of where your company stands in its Contract Lifecycle Management (CLM) journey, it is often necessary to provide or reiterate the cold, hard facts for why leveraging CLM software is vital. This blog series will walk you through several powerful and persuasive topics that can be helpful in convincing the right people in your organization to explore and move forward with a smart CLM platform.
Clearly one of the most compelling considerations for CLM software is the startling cost of mismanaging contracts. And by cost, it’s not just the financial implications, but also the time wasted trying to “fix” situations, such as lost contracts, when companies don’t have the technology and processes to properly handle CLM.
Inadequate contract management can impact the following:
An organization’s bottom line is always important as financial prosperity allows more growth and development. Understanding the value of contract management is key. For example, an analysis by Word Commerce & Contracting found that the average cost for a business to process and review a basic everyday contract has risen to $6,900. More complex contracts can cost as much as $49,000. Imagine the money that is lost when a contract isn’t done right the first time, or even worse, gets executed improperly.
Poorly managed contracts are extremely costly and can cause significant strain on annual income. Another World Commerce and Contracting study found that companies lose 9.2% or more of their bottom line through ineffective contract management, such as slowed negotiations or missed deadlines.
The average Fortune 2000 company holds approximately 20,000-40,000 active contracts. But according to one study by The Aberdeen Group, 71% of companies are unable to find at least 10% of their contracts. Not only is this an administrative nightmare with an incredible amount of time wasted searching, it can often lead to very costly lawsuits or missed renewals.
How do you consolidate all of this key data with other information to influence the key stakeholders in your organization that CLM software is not only beneficial, but extremely necessary? ContracPodAi offers a step-by-step guide, Building a Business Case for CLM, to help you obtain buy-in and instill confidence to initiate (or expand) an improved, streamlined, and smarter contract management approach.
The next post in this series will focus less on the financial statistics associated with CLM. But just as important, it will focus on the human aspect of CLM – how to communicate and empathize with stakeholders to understand their contract management pain points by asking the right questions….don’t miss it!
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