Secrets to Improving Sales Contract Management

Transcription

1 Secrets to Improving Sales Contract Management The livelihood of any successful organization lies with effectively managing agreements with customers, suppliers and partners. A company s ability to effectively manage sales contracts directly corresponds to its top-line and bottom-line revenue from time efficiencies to revenue increasing clauses to recognizing revenue sooner. Contract management is a very complex, circuitous, and time-consuming process. Numerous stakeholders are involved throughout the organization such as sales, legal, finance, and the departments managing obligations or deliverables. Aligning their goals is a continuous challenge. The components within the contract itself are loaded with many moving parts and ever changing variables. Many stakeholders, especially those in legal departments, lose sleep at night wondering what has changed in a contract and what kind of obligations the organization has entered into. APTTUS Corporation apttus.com US: (650) EMEA: +44 (0)

2 Components of a Contract In many organizations, contracts are manually managed, leading to human error, bottlenecked contract cycles, limited process control, minimal risk management and no contract performance visibility. The results are missed obligations, unachieved negotiated terms, reduced revenues, increased costs and low compliance. Automating contract management helps companies mitigate risks and bottlenecks by improving control, visibility and significantly shortening contract creation time. According to an Apttus poll, most organizations (27.3%) store contracts on a shared network drive followed by their CRM system (no automated contract management solution) (22.7%). Those who do currently use an automated contract management solution account for 18.2% of those polled. The remaining 30% store them on a personal desktop, in an ERP system with no contract management automation or have some other solution APTTUS 2

3 How does your organization currently store digital contracts? The Apttus Benchmarking program identifies current performance and compares it to your peers to make operational recommendations for improvement. Contract Management By implementing Contract Management software, companies can better manage the entire contracting process, from initiation to expiration, by increasing visibility, managing approvals and deliverables, and capturing all steps of the process with alerts and notifications. Contract Lifecycle Management A priority at the C-level is trying to dramatically minimize Days Sales Outstanding (DSOs) with efficient cycle management, improved accuracy, collaboration and sales team empowerment, while mitigating contract risk. By looking holistically at contract lifecycle management from request to amendments and approvals, 2013 APTTUS 3

4 organizations can better manage revenue recognition to meet quarterly targets, minimize revenue leakage by reeling in rogue discounting and language, and ensure that your organization gets exactly what you negotiate. There are all sorts of obligations that your company enters into, and questions or processes needed in order to manage those obligations. There are attachments to the agreements that need to be stored and easily referenced. And, there are business rules that need to be adhered to around creating a contract, for instance, when to use a specific template or which pre-determined clauses to include when doing business in a specific region. All of this is considered when you look at contract lifecycle management and implement an automated system. The real secret to contract management is ensuring you get the structured data that goes into the contract management system straight from the source, such as the Microsoft Word document, so that your reporting system will have accurate data. If something gets keyed in wrong, it affects reporting, forecasting, transactions and ultimately, the bottom line. Without automation, contract management can be a tedious, disjointed process across various software programs. Pricing is typically done with Microsoft Excel spreadsheets. Clauses are written in Microsoft Word. Approvals are done over the phone, via text or in s. When it comes to managing versions, pricing and approvals, much of the inefficiencies and risks result from having to input the data from various programs such as Word and Excel. Not only is this redundant, time-consuming work, it s error-laden as well. Another side effect of no automation is that tracked changes and comments needed to ensure clauses are in sync and manage renewals are often omitted. Significant contract authoring often occurs during negotiation and the better it is managed the more effective your contract negotiation will be. Authoring provides clauselevel management, the ability to extract structured data directly from a changing Word document and move that data into a reporting system to create greater visibility into contract changes. Authoring helps effectively and efficiently manage the entire change process during contract negotiation. Being able to look at modifications as they come gives you a greater understanding of where the modifications are coming from. The ability to tag records enables better planning for improved contract management in the future. How complex are your sales contracts? Most contracts require some level of modification. According to an Apttus poll, 66.7% of companies said their contracts are always modified; 33.3% said their contracts require a few modifications. No organization said that its contracts do not require modification. When deal points are being negotiated and changed weekly, 2013 APTTUS 4

5 daily or even hourly, the only way to manage your overall contracting process and ensure that you have complete accuracy and visibility is to keep structured data in its original source and input that directly into your contract management system. Managing Contract Compliance Without automated contract management, there is a big gap between the opportunity in CRM and your ERP solution, which manages all of your financial transactions. This is a chasm that many organizations are struggling to cross and compliance can become a casualty. Compliance means that you re never missing a deadline or an obligation again and making sure that transactions in your ERP solution are both what you expect and what you have negotiated. An automated contract management system will guarantee you get what you negotiate while ensuring the right requirements are applied for specific situations. For instance, organizations that do business with government entities will need contracts that are customized to those entities and their compliance requirements. Automated contract management provides the control and visibility necessary to improve compliance. Plan for Success You have to plan for success. You don t want to try to boil the ocean all at one time. You want to find some key areas where you can implement some success and then share it with the organization. Sandra Ficke-Bradford, Motorola When planning to implement a contract management system, keep these tips in mind: Think about who your target audience is who the business owners are and what do they need out of a contract management system. Get in front of your business owners to make sure they understand what you re doing, and that you understand how their process works today. Don t underestimate the power of change management. This requires that you ask your stakeholders many questions. Plan well for your data collection. You really have to think about what you want to do with your data before you implement because you don't want to have to do it twice. The benefits of automating contract management are real. If your contracts are done faster, you're going to be able to collect on them sooner. If they re accurate you re going to have far fewer disputes. General Counsels and C-level executives will sleep at night because they have confidence that the contract management process is working APTTUS 5