The unfortunate reality of many professionals working in compliance and contract management today is that they are overworked and underappreciated. Whether you’re a paralegal struggling to keep up with regulatory compliance or a contract manager manually updating agreement terms, there are ways to lighten the load while improving overall efficiency and reducing the risk of mistakes. The problem is, many of the decision makers are in denial about how serious the issue is and how much risk they are inviting into their business processes.
To break this cycle, we have identified four key types of contract mismanagement denial that perpetuate the struggle of those working to maintain compliance and error-free contract management.
If it’s not broken…
The classic adage “if it’s not broken, don’t fix it” is employed more than any other type of denial to justify inefficient and antiquated solutions. But when it comes to managing contracts, this philosophy allows a contract specialist to continue falling behind as technology advances. This only increases the risk until, inevitably, a contract deadline gets overlooked or a key regulation is not upheld and results in hefty fines. Once the contract mismanagement starts costing the company big money, the decision makers may revisit the idea of the ‘not broken’ contract process.
Smart business leaders will act before incurring a costly mistake. But how do they know if they need to act? Start with this ITProPortal article: “The unwritten laws of contract software: four questions for your legal team.” Once legal teams and decision makers examine their current solution, there are many reasons to pursue a new solution that reduces risk and keeps up with today’s fast-paced contract workflows.
We have a contract management expert
Another type of denial is thinking that there’s a person who is “on it” and is handling the entire process. While their efforts are admirable, they are most likely unsustainable. One-person solutions are usually some combination of paper contracts, digital documents, and ad-hoc email approvals, and their methods are near-impossible to replicate. What happens when that person goes on vacation, or worse, leaves the company?
Tracking approvals and ensuring compliance should not rest solely on the shoulders of a single person but should be a part of a complete contract solution that issues deadline notifications, enables easy workflow editing, and features assigned back-up approvers and process owners. That way when the contract manger or paralegal goes on vacation, the contracts keep flowing. The solution shouldn’t replace your compliance or contract expert but allow them to more efficiently manage compliance with automated approval tracking and easy auditing to satisfy regulators. As one of the world’s largest energy companies, Chevron needed a complete compliance solution to navigate the vast regulatory landscape, and the company implemented a contract management system that does just that. Read more about their solution here.
We can’t afford a solution
The easy answer for cash-strapped organizations, non-profits, or new SMBs, this form of denial seems the most credible. But it doesn’t add up when you consider the research done by the International Association of Contract and Commercial Management (IACCM), which estimates that the average company loses about 10 percent of annual revenue due to poor contract management practices. That missing 10 percent could easily pay for a contract management solution over time, because the life of a quality solution is at least a decade or more. And when you factor in an unconditional satisfaction guarantee on the software, there is virtually zero to lose.
We already have a solution
This last type of denial could be a valid excuse, if it is true. However, many companies have contract software that leaves a lot to be desired, especially from the people who use it most. When thinking about your current solution (or pitching a new solution to an executive), ask yourself:
- Can the contract solution easily access documents and approval statuses across the entire organization?
- Can the legal team or manager easily modify a workflow or create new contract templates without requiring IT resources or vendor support?
- Will your current software be able to scale with your company’s growth over the next 10 years?
- Does the solution easily integrate or extend into other business processes?
If you said no to any of these questions, then you’re missing out on critical capabilities that reduce compliance risk and enable cost-saving efficiencies that benefit the entire organization.
Agiloft’s Contract Management Suite offers these capabilities and much more with its extremely configurable no-code platform. Agiloft earned PC Magazine’s Editor’s Choice for contract management for the last three years and was recently nominated for Canadian Lawyers InHouse Readers Choice Award for legal software. Learn more about how Agiloft streamlines workflows and contract approvals here.
Read more about compliance:
Risky business: five risks your contract management system is exposing you to and how to fix them