As your company’s volume of contracts increases, some contract management systems will leave your company exposed to long-term risks. Learn how to recognize and fix five contract management risk factors that leave you vulnerable:
1. Excessive access
Excessive access can lead to unscrupulous employees mishandling information or walking away with trade secrets. Access needs vary between different departments, divisions, teams, and employee classifications. Keeping information safe requires multilayered access controls that compartmentalize data by addressing these different needs. Only those that need access should have access.
2. Missed expirations
Missed expirations and renewals expose companies to liabilities. For example, licensing agreements commonly specify finite periods of time that intellectual property belonging to another party may be utilized. Operating outside of licensing terms is a surefire way to get sued. For the licensor, the same concern represents the potential loss of revenue if the contract expiration is missed and not renewed. Quality contract management software goes beyond repository-only functionality and includes the ability to track contracts and alert staff of upcoming expirations and renewals.
3. Compliance issues
The lack of compliance can lead to regulatory fines and missed opportunities. Companies can eliminate compliance issues like rogue spending and ensure adherence to regulatory provisions by implementing rule-based contract management software that requires contracts to meet specific conditions as they move through the approval process. Rule-based contract management software can also log events and actions as they occur, making compliance documentation automatic, instead of a cumbersome afterthought.
4. Ineffective approval workflow
Without approval workflow automation, contracts can get unnecessarily delayed. And the longer contracts take to get approved, the greater the risk of deals dying on the grapevine. Many deals even have terms that expire should they not be executed in a specified timeframe. The solution is a system that removes human-caused delay by automatically nudging, routing, and escalating. By removing humans as much as possible from the equation, you also minimize the oops-factor.
5. Lackluster Reporting
With repository-only contract management software you aren’t harnessing the power to turn data into easily actionable information. In contrast, contract lifecycle management software uses flexible reporting to arm executives with company-specific KPI-driven reports that allow them to see adverse issues (like undesirable contract risk profiles) before they become disasters.
These risks can cause more than just headaches. For example, a major aviation services company used a contract management system that exposed the company to an unnecessary amount of risk. Contract expirations often went unnoticed, and if a team underwent an audit for contract compliance, it could take days or weeks to locate all the relevant documents.
After implementing a robust Agiloft contract management solution, the company’s staff can now provide the necessary records within minutes and no longer miss contract deadlines or lose contracts. Learn how the company reduced its risk while increasing productivity: Read the case study.