The procurement function, which helps organizations to acquire quality goods and services from reliable suppliers at the minimal cost and in time, contributes in a major way to the success of the organizations’ businesses. Therefore, contract management is important for organizations to ensure that they effectively and efficiently execute the procurement function; often, for this purpose they, invest in contract management software solutions.
Buyers negotiate and enter into procurement contracts with suppliers. A procurement contract establishes a mutually binding contractual relationship between the contracting parties. They contain agreed-upon terms, relating to the descriptions and specifications of the goods / services under procurement, delivery schedules, prices, payment terms, etc. Procurement contacts act as the framework for both the parties to effectively fulfil the mutual contractual obligations.
Procurement contract management is the process of managing the procurement-related contracts, which form the legal documentation governing the work-relationship between buyers and suppliers. It involves negotiating the terms and conditions of the procurement contracts, ensuring the fulfilment of the contractual obligations, and efficiently managing the execution of the contracts. It helps to monitor and manage the execution of contracts, meet the necessary statutory, regulatory, organizational, & procedural compliances, and minimize risks. Contract management is an essential part of the procurement process. Streamlined and effective lifecycle management of contracts is achieved through the use of contract management software solutions.
Contract management software solutions and their important features
Contract management software solutions automate and streamline the process and workflow associated with the management of the organization’s contracts right from the initiation stage through execution and performance stages to the contract’s renewal / termination.
Contract management software is designed to help organizations to streamline the process and workflow associated with the administration of the organization’s contracts during the entire contract lifecycle. It helps in efficiently and cost effectively performing the various functions, such as contract authoring, contract approval, contract execution, tracking supplier performance, and contract renewal / termination.
Some of the important features of typical contract management software are the following:
- The software acts the central repository of documents relating to the organization’s contracts, approved contract templates & clauses, and such others
- The access to the contact documents, permission to make changes, and authorization to sign are highly rule-based and the contract management software has the necessary advanced security features to configure the access and permissions in a variety of ways
- The software has version management and track change facilities
- The software has a set of libraries containing pre-approved contractual clauses, templates, digital signatures, and such others that help author / draft the contracts
- The software has the facility to generate and communicate alerts / notifications about the key dates, such as the impending / missed milestones and contract renewal & expiry dates
- Contracts must be compliant to organizational, regulatory & statutory requirements and the contract management software can ensure this.
- A good contract management software solution can be of great help in tracking the performance of suppliers & the status of contracts
- Contact management software can generate customized reports giving salient contract details including the contract value, delivery schedule, signatories, current status, etc. The reports can be generated & communicated / visualized on dashboards to the stakeholders
A good contact management software solution with the above and other such features will help the organizations in efficiently achieving the contract’s desired objectives. The availability of contract templates and library of pre-approved contractual clauses & digital signatures, version management & track change facilities, and such others greatly helps organizations to quickly author, negotiate, and arrive at efficacious contracts. The software ensures compliance and adherence to the laid down review and approval procedures and processes. The contact management software solution also enables tracking and assessment of the performance of contracts and this feature empowers organizations to take further decisions relating to remedial actions, contract terminations / renewals, and such others.
The objectives of investing in Contract Management Software
The main objectives of investing in contract management software solutions are to ensure the following;
- Efficient and effective management of contracts
- Contracts are finalized speedily, accurately and cost-effectively
- Contractual terms are unambiguous to the contracting parties
- Contracts meet the organizational, regulatory, and statutory compliance requirements
- Smooth execution of the contracts
- Goods and services are delivered as specified in the contracts and at agreed prices
- Delivery of goods / services and payments for the same happens as agreed
- Suppliers’ performances are well monitored
A contract lifecycle management software solution, by automating and streamlining the process and workflow associated the management of the organization’s contracts, plays an important role in achieving the above objectives.
Procurement function is important for the successful performance of business. Procurement function helps organizations in the timely acquisition of the right quality goods and services required by them from reliable suppliers at the right price, right time, right quantity, and right place. Contract management plays an important role in the well-organized execution of the procurement function. Organizations deploy contract management software solutions to help them efficiently perform the procurement function. The use of software speeds up the contract drafting, negotiation, approval, and signing process. The activity tracking feature of the contract management software ensures accountability and compliance while minimizing risks.
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