Risk is an inevitable element of all professional activity and contracts are created and enforced to try and limit the impact of negative risks occurring. These risks can either be external, such as vendor quality, purchaser reliability or creditor support, or internal, such as employee honesty or legal adherence.
It is natural for a company and its management to want to reduce all risk as much as possible and so the contract management process, from its initial drawing up, through the negotiation phase and the project’s lifecycle and implementation, is a vital area for making this happen. There are many important business software needs out there, but there’s a reason why so many organizations are making contract management software a priority, to give contracts the level of security and consideration their importance deserves.
The best contract management software can help your company to reduce its contract-related risk in the following ways.
- Preventing loss or compromise of confidential contracts
Business intelligence and corporate espionage work in many ways. Not only are companies at risk from competitors seeking to gain an upper hand but also from cyber criminals who can use any private information either as leverage in scams or to commit fraud. Contract management software removes the risk of digital or paper documents falling into the wrong hands, either by being stolen or simply misplaced (e.g. an e-mail sent to the wrong person or a laptop forgotten at a cafe).
The best contract management software will provide for end-to-end encryption of all the documents it holds, ensuring that your most important information is secure in an impenetrable cloud-based vault.
- Centralized location for accessing all documents
Another advantage of having a secure, cloud-based repository for all of a company’s important contracts is that it makes them easier to access across distances. This reduces risk as it means confidential agreements don’t have to be sent via email or worse, by fax or post.
- Creating a clear calendar of important dates
A contract defines the dates by which deliverables, payments and deadlines should happen, making each individual contract a timeline in itself. Collated together, multiple contracts can create a deluge of key dates that need to be observed, risking financial and legal repercussions if not. Having a core, contract-based, calendar should be essential for every manager, but inputting and updating such a calendar can eat up time, be prone to human error and also be easily forgotten.
Contract management software reduces this risk by extrapolating the key dates contained on your contracts and automatically informing you of approaching deadlines and other important dates in a project’s lifecycle.
- Better review accessibility
One of the biggest risks that contracts hold, especially hard copy paper ones, is that they can be very dense works of legalese. This means that finding the relevant clauses or sections pertaining to the issue you want to double-check can be very off-putting and time-consuming. Utilizing project management software means that all documents, even if they were simply scanned from hard copies, can be machine read and searched for the relevant terms, making that reviewing process much easier and reducing risk in the process.
- Simplified oversight and compliance
Maintaining one centralized location for all contracts means that across all the multiple activities, employees and outside contractors that an organization may have, it is much simpler for management to access and oversee the progress of projects and observe how closely they are aligning to budgets and agreements.
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