Click here to dive into the ocean of more such articles by Absolaw.
The contract management industry has been around for about 30 years, and it is still struggling to move into the mainstream. Contract Management Services are part of the broader outsourcing market, which was worth an estimated $183 billion in 2013. As a business sector, contract management is growing rapidly: revenue in North America grew from $20 billion in 2005 to more than $40 billion in 2010. Most of this growth is due to increased activity around enterprise resource planning (ERP) software implementation projects, which are among the largest contracts that need managing.
Because many organizations struggle with their initiative to provide better contract solutions for their customers and partners; few companies have successfully adopted best practices or integrated these service offerings into their core business processes. Better contract management can lead to significant benefits for organizations and customers alike, including:
- Improved contract-to-cash performance.
- Reduced legal costs from disputes.
- Increased customer satisfaction with improved functionality.
- Faster time to market new products and services.
While these benefits are clear, the majority of companies still believe there is a benefit in having dedicated contract managers whose work has little impact on other areas. The biggest obstacle involves organizational change. For many companies, moving towards better contract management would require integrating it into business processes that already deal with managing third parties or suppliers. This includes decisions surrounding which employees should be responsible for managing contracts, along with requiring them to cooperate more closely with colleagues who handle related tasks such as financial management and performance review.
Companies that have leaped effective contract management often realize sizeable returns, with savings of 35 percent or more on average. Upgrading from an ineffective paper-based process to one with digital tools can reduce costs by at least 50 percent. In some situations, organizations have reported cost reductions as high as 80 percent, attributable to increased transparency and collaboration made possible through digital technology. The most important factor for success is adopting a holistic approach to managing contracts across the enterprise, regardless of size. By establishing alignment between organizational goals and IT (information technologies) strategies; contract managers can play a critical role in helping companies maintain their competitive edge in today's global marketplace.
Here's a list of 8 industries/businesses that benefit the most from Absolaw's Contract Management Services:
Contract management services are extremely useful for the manufacturing industry because of the amount of work that goes into managing different contracts. Contract management services help the manufacturing company in many ways such as improving contract-to-cash performance, reducing legal costs from disputes, and increasing customer satisfaction with improved functionality. With the use of contract management services, manufacturing companies can focus on their core competencies which will ultimately increase production.
A Service organization may need legal contracts because they often subcontract work out to other businesses or individuals who require legal documentation for agreements such as a non-disclosure agreement (NDA) or a confidentiality agreement (CA). A service company can utilize contract management services by utilizing their knowledge in law and expertise in multiple different fields. This ensures that all parties get what they want without any misunderstandings.
Financing organizations may have specific requirements for getting an invoice fulfilled quickly with managing finance terms and conditions. These invoices play a pivotal role in the financing process, ensuring valid and accurate information. It is therefore critical for financing organizations to use contract management services as a means to get their financial documents reviewed quickly and easily while still ensuring the terms are correct. Financial institutions focus on helping their customers meet their goals from savings and investments to borrowing money. They are heavily regulated by the government which exceeds legal requirements, making it difficult for them to ensure they have accurate financial records that will fulfil internal and external audits. Contract management services can provide a strategic approach to ensuring all information is up to date while meeting or exceeding regulatory requirements to reduce risk factors that could affect businesses' bottom line.
Healthcare organizations rely on contractors to help them provide patient care. Contract management services can be very helpful for the healthcare industry because, without them, these organizations wouldn't be able to manage risk and compliance as efficiently. Equipment leasing contracts are a perfect example of how contract management is key in recruitment agreements (contracting work for other companies). Also, many contractors that build hospitals or clinics need to work with the hospital's management team before providing any work. Contract management services allow healthcare providers to streamline those processes and create more efficient relationships with contractors. Contract managers can help streamline these processes through the following steps:
1). Researching available contractors near the hospital that can meet their required standards while limiting risks from a reputation standpoint.
2). Interviewing those potential candidates to determine if they meet the needs of healthcare providers by conducting extensive background checks.
3). Negotiating with those candidates to determine pricing, terms, and timelines for each contract.
Technology companies have their own set of challenges to deal with. Contract management services help them in many ways. For instance, through contract management technology companies can reduce customer acquisition costs by at least 20%. There is also the benefit of cost-savings as the result of improved vendor performance and higher contract utilization. Businesses in this industry often find that they can speed up time-to-market for new products by reducing risk, increasing efficiency, and reducing turnover rates among employees. Technology companies are very reliant on contractors such as software developers, and customer service representatives to deliver their products or services to customers. Technology businesses can use Contract Abstraction to reduce risk when entering into contracts with outside parties because they have been proven to be a way in which companies can minimize unexpected costs by providing standard forms for all subcontractors. Because contract management is a very important aspect of technology organizations it allows these types of businesses to become more successful while reducing their risks at the same time.
The consumer goods industry is a business that can benefit from contract management services in many ways. For example, the industry can use contract management to reduce time-to-market for new products which in turn reduces the risk of starting a product and not being able to sell enough of it. Contract management services also help by increasing efficiency and reducing the turnover rate among staff.
Businesses also benefit from contract management services by being able to increase the quality of service and products they provide.
Contract management services can help businesses in the construction industry improve their performance as well. Construction companies can reduce time-to-market for new projects, which reduces risk when starting a project that may not be successful from day one. Contract managers assist in the reduction of crew turnover rates which results in contractors having reliable employees who receive consistent paychecks. Contract management services can be useful in the construction industry because it is essential to keep track of labor costs, government contracts, and other important information regarding different jobs at hand. This includes planning and scheduling the use of different construction equipment. Contract management services can also make sure that all of the subcontractors, the owners, and the general contractors in the construction industry receive all of their payments on time and are paid correctly.
Media & Entertainment:
Media and Entertainment companies are very reliant on contractors such as photographers, videographers, technicians, etc. To ensure that all their needs are being met by third parties they have contracted, these organizations need to be able to manage risk and compliance efficiently. Contractors who rely on media servers for work may not necessarily be the most reliable employees. Leasing agreements can help solve this issue because it will allow media companies to achieve more efficiency with their labor costs as well as create more consistent payrolls for contractors. Contract managers can assist in these processes because they understand the importance of communication between different departments when managing contracts with outside parties. This is why contract management services can come in handy for businesses in this industry.
Contract management services can assist in many ways for businesses of all sizes. Whether you're a technology organization, construction company or, media and entertainment business- these 5 industries that benefit from contract management services will help to make sure your employees are being paid on time, projects get completed efficiently with minimal risk involved and customer service is top-notch. If your company could use some extra support when establishing contracts such as drafting standard forms for subcontractors, leasing agreements with outside parties, or managing the compliance process - contact us today! We would love to partner with you to create a stellar contract strategy that benefits your industry specifically.