Contract management isn’t exactly something to write home about, but that doesn’t mean we shouldn’t give it any attention. They’re integral to an organization, in the way it’s run and protects them by ensuring agreements are met. The truth of the matter is that they do so much more, and if you look in the right spots you’ll find all the untapped benefits they have to offer. But you have to look. Here are some KPIs you can add to prove the importance of proper contract management.
Contract Lifecycle Length
Negotiations aren’t easy and take time. When both parties are out to get the best deals for themselves, negotiations often stall. In cases such as this, it’s the age-old adage that “time is money.” The longer it takes to close a deal, the longer you may be paying for more expensive supplies or are without a solution that can bring your organization ROI. If you notice that negotiations frequently stall with one particular vendor it may be time to look for improvements in your process to avoid making the same mistakes or look for a new source.
We’ve said it before, one of the biggest problems with poor contract management processes is missed renewals or instances where contracts fall into auto-renewal without notice. This ends up costing your organization money. A KPI to keep your eye on then is how many times has this happened over the years and year over year, has it improved and is there room for improvement?
We know that looking over jargon-filled contracts can be a bore, but that’s no excuse to stall the process. Often times, you might find that a culprit is the approval process is actually those from your own organization. As a contract moves from drafting to review, you can uncover which reviewers and departments are taking more time than they should in order to provide edits or sign-off.
Contract management isn’t as cut and dry as we thought. It’s not simply about getting things signed and storing them away for another day. These 3 KPIs are an opportunity to find efficiencies in your contract management process. Finding pitfalls and improving upon them can, in the end, save your organization money.