As a CFO, you are always striving to gain control of spending, preserve cash, and reduce costs in an effort to improve your company’s bottom line. Finance executives looking for a way to inject some vitality into revenues should start by examining their current contract management practices and tools. Efficient contract management is tied directly to profitability.
According to an Aberdeen Study, Contract Lifecycle Management and the CFO, companies that deploy contract lifecycle management systems realize a range of benefits including reducing revenue loss due to poor oversight of sales and supply contracts, and the ability to accurately manage cash and working capital.
By deploying a systematic approach to the development, approval, and execution of contracts you can:
Gain Visibility into Corporate Obligations
Contract lifecycle management creates transparency across the entire enterprise. It provides a clear view into how obligations are being met, where they are being met, and a means to measure and reduce the cost of meeting each contractual obligation. It gives financial executives the ability to trace the impact of a contractual obligation throughout the organization by policy definition and enforcement, cross-functional processes, and procedures.
Shorten Cycle Times
The timing of accounts payable and accounts receivable is a significant area in which cash leaks from the system. Significant reductions in business cycle time preserves cash on hand. On average most companies wait 60 days to collect on receivables. Putting an automated system in place allows for quicker, more efficient payment resulting from clarity of contract terms and minimizes the need for bank borrowing.
Visibility into your active contract portfolio mitigates risk, ensuring the effective management of the process from initiation and negotiation to execution and expiration. Contracts typically contain multiple terms and conditions that trigger cost penalties and potential liabilities, while Sarbanes-Oxley and other compliance initiatives have all but inserted government rules into contractual promises. An enterprise-wide contract lifecycle management system optimizes your internal and external relationships and protects your company in today’s changing regulatory environment.